Oil major BP has announced plans to sell its petrochemical business to chemical giant INEOS for $5bn (£4bn). It is the next strategic step in focusing portfolio as part of reinventing BP.
BP said in a statement on Monday it had agreed the deal to sell part of its business that makes chemicals as a byproduct of oil refining.
The sale is part of new chief executive Bernard Looney’s radical plan to remake BP for the clean energy era and part of broader plans to sell $15bn-worth of assets.
Bernard Looney, BP’s chief executive, said the petrochemicals unit’s strategic overlap with the rest of the company was “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,” he added.
Under the terms of the agreement, INEOS will pay BP a deposit of $400 million and will pay a further $3.6 billion on completion.
An additional $1 billion will be deferred and paid in three separate instalments of $100 million in March, April, and May 2021 with the remaining $700 million payable by the end of June 2021.
BP’s petrochemicals business is focused on two main businesses – aromatics and acetyls – each of which has technology and manufacturing plants.
In total, the businesses have interests in 14 manufacturing plants in Asia, Europe, and the US and in 2019 produced 9.7 million tonnes of petrochemicals.
Looney added: “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.
“Today’s agreement is another deliberate step in building a bp that can compete and succeed through the energy transition”.
In total, the businesses included in the transaction currently employ over 1,700 staff worldwide, expected to transfer to INEOS on completion of the sale.
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