BP sells North Sea Pipeline System to Ineos

British energy giant BP plc today struck a deal to sell its Forties Pipeline System in the North Sea to London-based privately-owned multinational petrochemicals company Ineos, for $250 million (£199 million).

BP CEO Bob Dudley and Jim Ratcliffe, chairman and CEO, Ineos

Under the terms of the acquisition, Ineos will pay BP $125 million (£99.5 million) on completion and an earn-out arrangement over seven years that totals up to a further $125 million.

London-based BP will retain rights to use the pipeline system's capacity.

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

The 100-mile Forties pipeline system is a strategic pipeline network in the North Sea which has a capacity of 575,000 barrels a day and transported an average of 445,000 barrels a day last year to the onshore terminal at Cruden Bay near Aberdeen in Scotland. Of that, about 55,000 barrels a day came from fields operated by BP.

The Forties pipeline supplies oil to Ineos' Grangemouth refinery near Edinburgh, which it acquired in 2005 from BP.

Ineos, run by British businessman Jim Ratcliffe, is currently engaged in a $600-million project to bring Shale Gas Ethane from the US to its petrochemical plants in Scotland and Norway.

Commenting on the transaction, 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 and improving their efficiency and reliability, securing long-term employment and investment," he added.