MOSCOW (MRC) -- Ineos has announced that it has agreed to acquire the Forties Pipeline System (FPS) and associated pipelines and facilities from BP, as per the company's press release.
The 235 mile Forties pipeline system links 85 North Sea oil and gas assets to the UK mainland and the Ineos site in Grangemouth in Scotland.
Under the terms of the agreement Ineos will pay BP a consideration of up to USD250 million for the business, comprising a cash payment of USD125 million on completion and an earn-out arrangement over seven years that could total USD125 million.
On completion of the deal the ownership and operation of FPS, the Kinneil terminal and gas processing plant, the Dalmeny terminal, sites at Aberdeen, the Forties Unity Platform and associated infrastructure will transfer to INEOS. These assets will transfer as fully operational units, at which point Ineos will be responsible for a strategic UK asset that delivers almost 40% of the UK’s North Sea oil and gas.
It is expected that around 300 people that operate and support the FPS business at Kinneil, Grangemouth, Dalmeny and offshore will become part of the Ineos Upstream business.
Jim Ratcliffe said: "The North Sea continues to present new opportunities for Ineos. The Forties Pipeline System is a UK strategic asset and was originally designed to work together to feed the Grangemouth refinery and petrochemical facilities. We have a strong track record of acquiring non-core assets and improving their efficiency and reliability, securing long term employment and investment. I am delighted that we can now bring this integrated system back under single ownership in Ineos."
BP group chief executive Bob Dudley commented: "BP is returning to growth in the North Sea as we bring important new projects, including the Quad 204 redevelopment and Clair Ridge, into production and pursue further opportunities beyond these. While the Forties pipeline had great significance in BP’s history, our business here is now centred around our major interests west of Shetland and in the Central North Sea.
The pipeline has long been an important feedstock supplier to Ineos at Grangemouth. We believe that through also owning FPS, Ineos will be able produce greater efficiencies and help secure a competitive long-term future for this important piece of UK oil and gas infrastructure."
20% of the oil that passes down the pipeline feeds the Ineos refinery to provide 80% of Scotland’s fuel.
The agreement further expands the Ineos Upstream business following the acquisition of the Breagh and Clipper South gas fields in the Southern North Sea from Letter1 in 2015, which currently supply gas to 1 in 10 British homes.
The acquiring entity will be Ineos FPS Limited, which forms part of INEOS Limited but is not part of the IGH SA Group.
The acquisition and transfer of operatorship is targeted to complete in Q3 this year, subject to the receipt of regulatory and other third party approvals.
As MRC wrote before, in April 2016, Ineos said the second manufacturing unit at Grangemouth’s KG ethylene plant had been brought back to life eight years after being mothballed. Ineos then said it had completed successful operational trials as it prepared to receive shale gas ethane from the US as petrochemical feedstock. The Ineos investment should bring US shale gas economics to Europe. The project includes contracts to acquire gas from the Marcellus Shale in Western Pennsylvania; connection to the new, 300-mile Mariner East pipeline to bring the gas to the Marcus Hook deep water terminal near Philadelphia; the design and commissioning of eight Dragon-class ships that will create a virtual pipeline across the Atlantic; and the construction of a new import terminal, including the biggest shale gas storage tank in Europe at Grangemouth.
The new import terminal at Grangemouth will also benefit the Fife ethylene plant in Mossmorran, Scotland, after it was announced that the owners of the plant had agreed a long-term sale and purchase agreement to secure ethane from mid-2017.
Ineos Group Limited is a privately owned multinational chemicals company consisting of 15 standalone business units, headquartered in Rolle, Switzerland and with its registered office in Lyndhurst, United Kingdom. It is the fourth largest chemicals company in the world measured by revenues (after BASF, Dow Chemical and LyondellBasell) and the largest privately owned company in the United Kingdom.
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