BP agrees $5bn sale of petrochemicals business

BP agrees $5bn sale of petrochemicals business

/ Oil & Gas / Monday, 29 June 2020 12:44

British fossil fuel producer BP has sold its petrochemicals business to Ineos in a $5bn deal that will boost the oil company’s under-pressure balance sheet.

Ineos, a petrochemicals company, will immediately pay BP a deposit of $400m, followed by $3.6bn when the deal completes and then another $1bn in three installments by June 2021.

The deal will result in Ineos taking on BP’s aromatics division, which produces chemicals for the polyester used in clothing, film and packaging, as well as BP’s acetyls business, whose products are used in food flavourings, paints and glues.

The decline in oil prices triggered by the coronavirus pandemic has damaged the finances of oil producers around the world, accelerating BP’s need to cut costs and restructure. BP said the crisis would take as much as £14bn from the value of its assets and it is cutting 10,000 jobs worldwide.

BP’s chief executive, Bernard Looney, said he recognized the sale would be a “surprise” for the petrochemicals business, adding the company would “do our best to minimize uncertainty” for workers.

"Today's agreement is another deliberate step in building a BP that can compete and succeed through the energy transition," Looney added.

"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 founder and chairman Jim Ratcliffe said in a separate statement.

BP's aromatic and acetyls business consists of 15 sites - five in the Americas, two in Europe and eight across Asia.

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