BP has agreed to sell its global petrochemicals business to Ineos for a total amount of 5 billion dollars. The sale will strengthen the company’s balance sheet while the oil major is reinventing itself to remain an important energy player in the future.

BP’s petrochemicals arm consists of two main businesses, aromatics and acetyls. Combined, the business units have interests in 14 manufacturing plants in Asia, Europe and the US and in 2019 produced 9.7 million tonnes of petrochemicals.

Under the terms of the agreement, Ineos will pay BP a deposit of 400 million dollars and pay a further 3.6 billion dollars on completion of the transaction, which is expected to be closed at the end of the year. An additional 1 billion dollars will be deferred and paid in three separate instalments of 100 million dollars in March, April and May 2021 with the remaining 700 million dollars payable by the end of June 2021.

“This is another significant step as we steadily work to reinvent bp”, says BP’s CEO Bernard Looney. “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.”

Ineos has bought large chunks of BP’s operations before. In 2005, the chemicals company paid 9 billion dollars for Innovene, a BP subsidiary that comprised the majority of the company’s then chemicals assets and two refineries. Ineos’ network spans over 180 sites in 26 countries and the company employs some 22,000 staff.