BP sells its petrochemicals business to INEOS for US$5bn

storage tank cooper river.jpg.img.750.mediumOil industry company BP has agreed to sell its global petrochemicals business to INEOS for a total consideration of US$5bn

Under the terms of the agreement, INEOS will pay BP a deposit of US$400mn and will pay a further US$3.6bn on completion.

An additional US$1bn will be deferred and paid in three separate instalments of US$100mn in March, April and May 2021 with the remaining US$700mn payable by the end of June 2021. The transaction is expected to finalise by the end of 2020, subject to regulatory and other approvals.

BP’s petrochemical business focuses on two major companies – aromatics and acetyls – each with leading technology and advantageous manufacturing facilities, including a strong presence in Asian growth markets. The companies have a total stake in 14 manufacturing plants in Asia, Europe and the US and produced 9.7mn tonnes of petrochemical products in 2019.

Bernard Looney, BP CEO, said, “This is another significant step as we steadily work to reinvent BP. These businesses are leaders in their sectors, with world-class technologies, plants and people. In recent years they have improved performance to produce highly competitive returns and now have the potential for growth and expansion into the circular economy.

“Strategically, the overlap with the rest of BP is limited and it would take considerable capital for us to grow these businesses. As we work to build a more focused, more integrated BP, we have other opportunities that are more aligned with our future direction. The agreement is another deliberate step in building a bp that can compete and succeed through the energy transition.”

This agreement means that up to now, BP has agreed on US$15bn of divestments and other disposals by 2019 and 2020, an amount originally expected to be reached by mid-2021.

Jim Ratcliffe, founder and chairman of INEOS, said, “This acquisition is a logical development of our existing petrochemicals business extending our interest in acetyls and adding a world leading aromatics business supporting the global polyester industry."

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