BP sells its petrochemicals business as energy sector takes a financial hit amidst COVID-19 outbreak

London: Fossil fuel giant BP has sold its petrochemicals business to INEOS for USD5 billion in order to strengthen company's balance sheet amidst collapsing oil prices. As part of the agreement, INEOS will initially pay BP a sum of USD400 million and rest amount i.e., USD3.6 billion will be paid on completion of deal. In addition to USD5 billion, USD1 billion will be deferred and paid in three separate instalments of USD100 million in March, April and May 2021, with the remaining USD700 million being payable by the end of June 2021.

BP’s aromatics division, which is responsible for the production of chemicals for polyester, will now be owned by INEOS. Additionally, 1700 employees from BP will be moving to INEOS and the latter company will hold ownership of BP’s acetyl business.

Chief Executive of BP said, “I am very grateful to our petrochemicals team for what they have achieved over the years and their commitment to bp. I recognize this decision will come as a surprise and we will do our best to minimize uncertainty. I am confident however that the businesses will thrive as part of INEOS, a global leader in petrochemicals.”

According to TechSci Research, “The deal will enable BP to hit a USD15 billion asset sales target, one year ahead of schedule. It will also give INEOS control over BP’s manufacturing plants in the United States, Europe, Asia and Trinidad & Tobago. INEOS will also get BP’s petrochemical technology and licenses. Coronavirus pandemic led to dip in oil prices and had forced BP to slash nearly 10,000 jobs and cut the value of its assets by up to USD17.5 billion. BP is also working towards turning itself into a more environmentally friendly company with the goal of cutting its carbon emissions to “net zero” by 2050.”

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