BP said on Monday it agreed to sell its global petrochemicals business to Grangemouth refinery owner Ineos for up to $5 billion.
“The agreed sale, the next strategic step in reinventing BP, will further strengthen BP’s balance sheet and delivers its target for agreed divestments a year earlier than originally scheduled,” said BP.
Ineos said the deal is “a good fit with Ineos existing asset base, reintegrating the Hull site and expanding the existing Ineos footprint at Geel, Belgium.”
Ineos chairman Jim Ratcliffe said: “We are delighted to acquire these top-class businesses from BP, extending the Ineos position in global petrochemicals and providing great scope for expansion and integration with our existing business.”
Ineos will pay BP a deposit of $400 million and 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.
Subject to regulatory and other approvals, the transaction is expected to complete by the end of 2020.
BP said its petrochemicals business is focused on two main businesses — aromatics and acetyls.
The businesses have interests in 14 manufacturing plants in Asia, Europe and the US and in 2019 produced 9.7 million tonnes of petrochemicals.
BP CEO Bernard Looney said: “I recognise this decision will come as a surprise and we will do our best to minimise uncertainty.
“I am confident however that the businesses will thrive as part of Ineos, a global leader in petrochemicals.
“Strategically, the overlap with the rest of BP is limited and it would take considerable capital for us to grow these businesses.”
Ineos has a network spanning over 180 sites in 26 countries, employing 22,000 staff worldwide.
Ineos has acquired a number of businesses from BP, most notably the 2005 $9 billion purchase of Innovene, the BP subsidiary that comprised the majority of BP’s then chemicals assets and two refineries.
BP chief financial officer Brian Gilvary said: “With today’s announcement we have met our $15 billion target for agreed divestments a full year ahead of schedule, demonstrating the range and quality of options available to us.”
Gilvary, who led negotiation with the owners of Ineos, added: “BP has had a long relationship with Ineos and this agreement reflects the mutual respect and trust that exists between us.
“It is a strategic deal for both parties that recognises both the high quality of the businesses and that Ineos is in many ways a natural owner for them.”
The businesses included in the transaction currently employ over 1,700 staff worldwide. These staff are expected to transfer to Ineos.
BP said the manufacturing plants, and their primary products, included in the sale, are:
Americas: Cooper River, South Carolina (PTA – bp 100%); Texas City, Texas (PX and metaxylene – bp 100%); Eastman bp Texas City Production Agreement (acetic acid); Atlas Methanol, Point Lisas, Trinidad & Tobago (methanol – bp 36.9%).
Europe: Hull, UK (acetic acid, acetic anhydride – bp 100%); Geel, Belgium (PTA, PX – bp 100%).
Asia: Zhuhai, China (PTA – bp 91.9%), Chongqing, China (acetic acid, acetate esters – bp 51%); Nanjing, China (acetic acid – bp 50%); Merak, Indonesia, (PTA – bp 100%); Kertih, Malaysia (acetic acid – bp 70%); Ulsan, South Korea (acetic acid and vinyl acetate monomer – bp ~50.9%); Taichung, Taiwan (PTA – bp 61.4%); Mai Liao, Taiwan (acetic acid – bp 50%).