BP has agreed a $1.7bn (£1.3bn) deal to sell its stake in Chinese petrochemical firm SECCO to China’s state-run oil company Sinopec.
The company currently has a 50 per cent stake in the joint venture with Sinopec and Shanghai Petrochemical holding the remaining 50 per cent. It expects to close the deal by the end of the year.
SECCO is a major producer of olefins such as ethylene and propylene which are used for manufacturing industrial chemicals and plastic products.
BP Global Petrochemical’s chief operating officer Rita Griffin said that the disposal was part of the company’s strategy to focus on areas where it has “leading proprietary technologies and competitive advantage”. She added that BP will continue to examine potential petrochemical acquisitions in China “to build on our position in the country”.
In addition to its stake in SECCO, the company has interests in three other petrochemical joint ventures in China including BP Zhuhai which operates the Zhuhai PTA 3 plant, the largest of its kind in the world. BP said that value of the assets included in the SECCO sale at the end of 2016 was $993m.
BP’s China president said that the Chinese market was still of “great significance” to the company and that it plans to “continue to invest in China in areas that provide the best growth opportunities” for the oil major.
According to the company, it will use the proceeds from the deal, which it expects to receive before the end of the year, for general corporate purposes.
BP said in its 2016 full year results that it was planning to strengthen the competitiveness of the plants in its petrochemical division and make the department more resilient to a bottom-of-cycle environment during 2017.
The company's stock was recently lifted by speculation of a potential takeover bid from Exxon Mobil.
By mid-afternoon BP’s shares were down 1.6 per cent to 446.45 pence.