GRANGEMOUTH refinery owner Ineos is ramping up expansion with a $5 billion (£4bn) deal to buy BP’s petrochemicals business.
BP has decided to sell the division to boost its balance sheet amid challenging conditions in the oil and gas market.
The prices of both commodities have plunged following the slump in demand triggered by the coronavirus crisis.
READ MORE: BP cuts billions off value of oil and gas assets amid slump triggered by coronavirus
The sale of the petrochemicals business will also allow BP to focus on what the company sees as more promising areas.
BP plans to increase investment in sectors such as renewable energy under chief executive Bernard Looney’s plan for it to become a net zero business by 2050 in terms of carbon emissions.
He said the sale was another deliberate step in building a BP that could compete and succeed through the transition to a lower-carbon energy system.
READ MORE: Can green energy revolution create enough jobs to make up for Scottish oil decline?
The deal will give Ineos control of an operation which is a major manufacturer of acids used in the production of goods ranging from packaging to food flavouring.
The petrochemicals business has operations in Europe, Asia and the USA. It has 14 manufacturing plants including a huge complex on Humberside.
The deal comes 15 years after Ineos bought the Grangemouth refinery from BP, with a £5bn portfolio of assets focused on another sector of the petrochemicals market.
The company’s founder and majority owner Jim Ratcliffe said the assets acquired through the latest deal would be a good fit with its existing operations.
“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,” he said.
Ineos has used acquisitions help it build a significant North Sea business in recent years.
The company bought the Forties pipeline system from BP in 2017. The sale formed part of a retrenchment process BP launched in the North Sea amid the fallout from the sharp fall in the oil price from 2014 to 2016.
READ MORE: Glasgow born oil executive to take charge of BP's North Sea business
BP said yesterday the latest disposal will allow it to achieve the target set in 2018 of of raising $15bn from divestments a year ahead of schedule.
Some 1,700 BP staff around the world are expected to transfer from BP to Ineos following the deal.
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