BP to sell Forties pipeline system to Jim Ratcliffe's Ineos for $250m

 
Caitlin Morrison
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Ineos boss Jim Ratcliffe (Source: Getty)

Oil giant BP has agreed to sell its Forties pipeline system (FPS) to Ineos for a total consideration of up to $250m (£200m).

The groups were first reported to be in talks over a potential sale last month.

The assets being sold include the main Forties offshore and onshore pipelines and other associated pipeline interests and facilities. Ineos will make a cash payment of $125m on completion and an earn-out arrangement over seven years that totals up to $125m.

John McNally, chief executive at Ineos olefins and polymers, said the company was "excited to get stuck in" at the FPS.

McNally told City A.M. 300 employees would be moving to Ineos as part of the deal, with no jo losses planned.

"Ineos have been saying for quite some time that we wanted to move into North Sea oil and gas, this is the next step," he said.

"We want to apply our skills and know-how to improve the economies of these assets."

According to McNally, Ineo and BP had been in talks for some time about a potential deal, and added: "We’ve reached a deal both sides are happy with."

When asked whether more investment in the North Sea could follow this deal, he said: "We are a very acquisitive business and the UK is certainly an area that we are very happy to invest in. We think it makes a lot of sense.

And on the topic of Brexit, McNally commented: "We are relatively neutral. If there were large tariffs imposed on trade that would be an issue, but for many reasons that's unlikely to happen. We’re quite sanguine about it."

Read more: Ineos is moving back to the UK after six years in Switzerland

"BP is returning to growth in the North Sea as we bring important new projects, including the Quad 204 redevelopment and Clair Ridge, into production and increase new exploration," said BP chief executive Bob Dudley.

"While the Forties pipeline had great significance in BP's history, our business here is now centred around our major offshore interests west of Shetland and in the Central North Sea.

"The pipeline has long been an important feedstock supplier to Ineos at Grangemouth. We believe that through also owning FPS, Ineos will be able to realise greater integration benefits and help secure a competitive long-term future for this important piece of UK oil and gas infrastructure."

Ineos is better known in the UK for its interest in the shale gas sector, with the largest portfolio in Britain's fracking industry, although Jim Ratcliffe, the group's chairman and chief exec, also has an interest in cars, with plans to recreate the Land Rover Defender.

This morning, Ratcliffe said: "The North Sea continues to present new opportunities for Ineos. The Forties Pipeline System is a UK strategic asset and was originally designed to work together to feed the Grangemouth refinery and petrochemical facilities.

"We have a strong track record of acquiring non-core assets improving their efficiency and reliability, securing long term employment and investment. I am delighted that we can now bring this integrated system back under single ownership in Ineos."

What is the Forties pipeline?

Built, owned and operated by BP, the Forties pipeline was opened in 1975 to transport oil from the Forties field, the UK's first major offshore oil field. Today it carries liquids production from 85 fields in the central and northern North Sea and several Norwegian fields on behalf of around 40 companies. The system has a capacity of 575,000 barrels of oil a day. BP sold its interests in the Forties field to Apache in 2003 and sold the Grangemouth refinery and chemical plants to Ineos in 2005.

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