MOSCOW (MRC) -- BP has agreed to sell its global petrochemicals business to INEOS for USD5 billion as part of plans to "reinvent" BP into a more focused, integrated energy company, reported S&P Global.
The sale agreement comprise all of BP's aromatics and acetyls businesses, including assets, technology and licences, as well as related assets that are concentrated mostly in Asia, the US and Europe, BP said.
Last year, BP's petrochemicals division produced 9.7 million mt of products and employed over 1,700 staff worldwide.
The sale will also include related interests, such as the chemical recycling technology BP Infinia, and BP's interest in acetylated wood developer Tricoya, BP said.
"This is another significant step as we steadily work to reinvent BP," CEO Bernard Looney said in a statement. "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."
Petrochemicals company INEOS has bought a number of businesses from BP over the past two decades, notably the USD9 billion purchase of Innovene in 2005, a BP subsidiary that comprised the majority of BP's's then chemicals assets, and two refineries.
Following the agreed deal, BP said it has now meet its current USD15 billion divestment target through 2019 and 2020, a year earlier than expected.
The move comes two weeks after BP said it plans to write off up to USD17.5 billion worth of assets after cutting its long-term price assumptions for oil and gas to reflect expectations that the coronavirus pandemic will accelerate a shift away from fossil fuels.
The write-offs would likely push BP's debt gearing to 47.8%, by far the highest in the sector, according to Royal Bank of Canada analyst Biraj Borkhataria.
Proceeds from the sale of its petrochemicals business will be used for "general corporate purposes," BP said.
Under the terms of the agreement, INEOS will pay BP a deposit of USD400 million and will pay a further USD3.6 billion on deal completion. An additional USD1 billion will be deferred and paid in three separate installments of USD100 million each in March, April and May 2021, with the remaining $700 million payable by the end of June 2021.
ubject to regulatory and other approvals, the transaction is expected to complete by the end of 2020.
As MRC informed before, BP says it expects to take an estimated USD13.0-17.5 billion hit in non-cash impairments and write-offs in the second quarter of 2020 after lowering its long-term assumptions for oil and gas price.
We remind that BP has entered into an agreement to license its latest generation technology for the production of purified terephthalic acid (PTA) to China’s Dongying Weilian Chemical Co., Ltd. Weilian Chemical is a subsidiary of Dongying United Petrochemical Co., Ltd, one of the leading manufacturers and distributors of petroleum and petrochemical products in China. Weilian Chemical intends to build a 2.5 million tonnes per annum PTA production unit at the Dongying Port Economic Development Zone in eastern Shandong province, adding to Dongying United Petrochemical’s existing refineries and paraxylene (PX) facilities portfolio.
PTA is used to produce polyethylene terephthalate (PET), which, in its turn, is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.
According to MRC's ScanPlast report, April total estimated PET consumption virtually did not change year on year, totalling 60,840 tonnes (in April 2019 - 60,980 tonnes). 235,160 tonnes of PET chips were processed in Russia in January-April 2020.
BP is one of the world's leading international oil and gas companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items.