Chemical Giant INEOS to Buy BP’s Petrochemicals Business for $5 Billion
To meet its divestment targets and radically refocus towards cleaner energy solutions, BP will sell off a significant portion of its business that creates chemicals from petrol by-products.
In a statement on Monday, BP confirmed that it plans to sell its global petrochemicals business to INEOS for a total consideration of $5 billion.
In addition to meeting BP’s goal of divesting $15 billion worth of assets, the move fits new CEO Bernard Looney’s wider plan of radically overhauling BP from an oil giant into a key player in the clean energy market. Looney lauded the petrochemicals sale as “another significant step” towards reinventing BP as a company that can survive the energy transition.
“Strategically, the [petrochemical business’s] overlap with the rest of BP is limited and it would take considerable capital for us to grow these businesses,” the CEO said in a statement. “As we work to build a more focused, more integrated BP, we have other opportunities that are more aligned with our future direction.”
In a statement of his own, INEOS’s billionaire founder Sir 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.”
BP’s petrochemical interests have been struck hard by 2020’s sharp decline in oil prices, leading to a write-down of between $13 billion and $17.5 billion in its earnings for Q2.
As part of the agreed terms of the sale, INEOS will pay a deposit of $400 million and a further $3.6 billion upon competition, with the remaining $1 billion to be paid in instalments between March and May 2021.