BP to sell Forties pipeline system to Ineos

BP is to sell its Forties Pipeline System (FPS) business, including the Kinneil terminal and gas processing facilities, to Ineos. The sale is subject to partner, regulatory and other third-party approvals and will not affect BP’s existing rights to capacity in FPS. Under the terms of the agreement Ineos will pay BP a consideration of up to $250mn for the business, comprising a cash payment of $125mn on completion and an earn-out arrangement over seven years that totals up to $125mn. 

BP Group Chief Executive Bob Dudley commented: ‘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. 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.’

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 FPS carries liquids production from some 85 fields in the Central and Northern North Sea, as well as several Norwegian fields, on behalf of around 40 companies. The system has a capacity of 575,000 b/d of oil and currently transports about 450,000 b/d on average – about 40% of UK production. BP sold its interests in the Forties field to Apache in 2003 and sold the Grangemouth refinery and chemical plants to Ineos in 2005.

Ineos Chairman and Chief Executive Officer Jim Ratcliffe commented: ‘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.’

Mark Thomas, BP North Sea Regional President, added: ‘This allows us to further focus our North Sea business around our core offshore assets – bringing new fields into production, redeveloping and renewing existing producing facilities and acquiring and exploring new acreage and interests through licence rounds and farm-ins. As with our recent agreement with EnQuest, we believe this is a good example of having the “right assets in the right hands”, offering new opportunities for the assets and benefitting the UKCS, in the spirit of the government’s aim of maximising economic recovery of the UK’s oil and gas resources.’

As part of the agreement, Ineos will also assume all decommissioning liabilities.

However, the UK’s Unite union believes the deal ‘is bad for Scotland and the UK’ and ‘not in the national interest’. It believes the sale will put workers jobs and pensions at risk and has called for the Scottish and Westminster parliaments to carry out ‘urgent inquiries’ into the deal. Unite was involved in two major disputes with Ineos over the treatment of workers at the Grangemouth refinery in 2008 and 2013. During the second dispute, the company – owned by billionaire Jim Ratcliffe – threatened to close the facility forever.  

Photo: Kinneil terminal

Source: BP