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Ineos confirms BP deal

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World Pipelines,

Ineos has agreed to pay up to US$250 million for BP’s Forties pipeline system (FPS) and the associated Kinneil terminal in the UK North Sea.

The deal will see Ineos assume responsibility for transporting approximately 40% of the UK’s oil and gas production, the firm said on 3 April.

Ineos will pay US$125 million up front to BP, with the remaining US$125 million potentially maturing over seven years under an ‘earn-out’ arrangement, based on unspecified performance targets.

Ineos already controls the 10 million t (201 000 bpd) Grangemouth refining and petrochemical complex near Edinburgh, which receives approximately 20% of the oil currently pumped through the FPS. BP’s CEO, Bob Dudley, argued that recoupling FPS and Grangemouth would enable Ineos to achieve “greater efficiencies” to ensure the pipeline had a “long term future.”

The St Fergus-to-Cruden Bay pipeline for natural gas liquids (NGLs) and the Cruden Bay terminal were also included in the transaction.

These assets should help Ineos reduce the overheads associated with transporting feedstock to the Fife ethylene plant, which was designed to use NGLs extracted from the North Sea.

Ineos is on a push to create an integrated energy business model that includes upstream, midstream and downstream assets. The firm purchased the Breagh and Clipper South fields in the Southern North Sea in October 2015, taking control of around 2.85 billion m3/y of gas production. Elsewhere, Ineos is looking to develop shale gas production from English assets purchased from iGas, also in October 2015, in a deal that made the company the UK’s third biggest shale player.

The company also announced in 2014 that it would spend up to US$1 billion on developing UK shale projects to yield feedstock for its downstream facilities. This strategy saw the company agree to purchase Engie’s UK shale portfolio for an undisclosed sum in late March.

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