Energy giant BP PLC has agreed to sell its petrochemicals business to British chemicals company Ineos Ltd., in a $5 billion deal that will help reshape its business for the global transition to lower-carbon energy, the company said this morning.
The deal could help BP pare its relatively high debt load and separates the company from its peers, as Royal Dutch Shell and ExxonMobil have been growing their petrochemicals businesses. BP says it would have taken considerable investment to grow the division, which is smaller than its peers’ businesses, The Wall Street Journal reports.
Petrochemicals are expected to be the largest driver of oil demand in the coming years, making up more than one-third of oil demand growth to 2030, according to the International Energy Agency.
BP and Ineos first proposed the deal several years ago and discussions were reignited in recent months, according to people familiar with the matter. The companies didn’t use advisers for the deal. Ineos, one of the world’s largest petrochemical companies, bought the bulk of BP’s petrochemicals business in 2005 for $9 billion.
It is the first multibillion-dollar deal by an oil major since the novel coronavirus caused companies to cut costs and scale back investment plans. The oil industry faced a double blow of increased production from Saudi Arabia and a collapse in demand. Oil prices have lost more than one-third of their value since the start of the year. Read the full story.