BP exits petrochemicals biz in $5 billion deal with INEOS

BP exits petrochemicals biz in $5 billion deal with INEOS

7:06 AM, 30th June 2020
BP-petrochemicals-storage-tank-cooper-river
BP to sell its petrochemicals business to INEOS. View of the storage tank at BP chemical PTA plant near Cooper river, Charleston area, South Carolina, US.

LONDON, UK: Energy giant BP PLC has agreed to sell its petrochemicals business to a British chemicals company for $5 billion, marking the largest deal by an oil major since the COVID-19 outbreak gripped the global economy, reported the Wall Street Journal.As part of the deal Ineos will pay a deposit of $400 million and $3.6 billion upon completion, which is expected by the end of the year. The $1 billion remainder will be paid by the end of June 2021.
BP will retain some petrochemicals facilities as part of its German refining business.

The sale to Ineos Ltd. could help BP pare its relatively high debt load and separates the company from its peers. Royal Dutch Shell PLC and Exxon Mobil Corp. have been expanding their petrochemicals businesses partly because they have a brighter demand outlook than other areas such as transportation fuels.BP is exiting the business, it said Monday, because it would have taken considerable investment to grow the division. BP’s business, which is smaller than its peers’, included components used in the making of polyester, paints, adhesives and packaging.

Petrochemicals are pervasive in everyday products, such as plastics, fertilizers and fabrics, and they are expected to be the largest driver of oil demand in the coming years, making up more than a third of oil demand growth to 2030, according to the International Energy Agency.BP and Ineos first proposed the deal several years ago and discussions were reignited in recent months, according to people familiar with the matter. The companies didn’t use advisers for the deal.Ineos, one of the world’s largest petrochemical companies, bought the bulk of BP’s petrochemicals business in 2005 for $9 billion.

It is the first multi billion-dollar deal by an oil major since the COVID-19 pandemic caused companies to cut costs and scale back investment plans. The oil industry faced a double blow of increased production from Saudi Arabia and a collapse in demand. Oil prices have lost more than one-third of their value since the start of the year.Earlier this month, BP said it was cutting 14 percent of its global workforce and would take a write-down of as much as $17.5 billion on its asset values, accelerating existing plans to reshape the company after the COVID-19 pandemic’s crushing impact on oil prices.Bankers said they expected deal activity to be focused on infrastructure and refining and processing assets as companies were reluctant to sell oil & gas fields when energy prices were under pressure.

“This is another significant step as we steadily work to reinvent BP,” said Bernard Looney, the company’s chief executive.Looney, who took the helm in February, had been crafting a yet-to-be revealed reorganization plan, due to launch in September.BP’s shares were up 3.4 percent in London on Monday.The deal means BP has reached its target of $15 billion of asset sales a year earlier than planned. Among the major oil companies, BP has one of the highest levels of debt in relation to its size.“The deal goes some way to fill the cash-flow deficit faced by BP,” said Irene Himona, managing director for oil & gas equity research at Societe Gnerale.

© Worldofchemicals News

0 Comments

Login

Your Comments (Up to 2000 characters)
Please respect our community and the integrity of its participants. WOC reserves the right to moderate and approve your comment.

Related News


Brenntag opens food application, development center in Brazil

ESSEN, GERMANY: Brenntag Food & Nutrition said it has opened its newest food application & development center (FADC) in Guarulhos, close to Sa ...

Read more
Man-made mercury pollution reaches world's deepest ocean floors

WASHINGTON DC, US: Scientists have found that man-made mercury pollution has reached the bottom of the deepest part of the ocean - the Marianas Trench ...

Read more
How chemistry has been fighting COVID-19: Cefic President

BRUSSELS, BELGIUM: “COVID-19 is a pandemic requiring a pan-European response,” said European Chemical Industry Council’s (Cefic) pre ...

Read more
Ingevity executive vice president to retire early

NORTH CHARLESTON, US: Ingevity Corporation said that Katherine Pryor Burgeson has elected to retire as executive vice president, general counsel and s ...

Read more
BP to establish major global business center in India

NEW DELHI, INDIA: Oil major British Petroleum (BP) said it plans to establish a new center for its global business services (GBS) operations in Pune, ...

Read more
Teijin increases chopped carbon fiber capacity in Germany

WUPPERTAL, GERMANY: Teijin Carbon Europe GmbH, the Teijin Group's carbon fiber business in Europe, has increased the production capacity of its German ...

Read more
www.worldofchemicals.com uses cookies to ensure that we give you the best experience on our website. By using this site, you agree to our Privacy Policy and our Terms of Use. X