BP to sell North Sea Forties pipeline system business for £250m

Oil giant BP is to sell its Forties pipeline system business in the North Sea to Chemical company Ineos for up to $250m, subject to regulatory approval.

The sale of the assets, which includes Forties offshore and onshore pipelines and other associated interests, will not affect BP’s existing rights to capacity in the pipeline system.

The 169km of pipeline transports about 450,000 barrels of oil a day, which is around 40% of the UK’s production from the North Sea.

Ineos will pay up to $250m for the business, which comprises $125m in cash on completion of the deal and an earn-out arrangement over seven years that totals up to $125m.

The sale means that BP will focus on its North Sea core offshore assets by bringing new fields into production, redeveloping and renewing existing producing facilities, as well as acquiring and exploring new acreage and interests through licence rounds and farm-ins.

BP chief executive Bob Dudley said that BP is returning to growth in the North Sea as it brings new projects, including the Quad 204 redevelopment and Clair Ridge, into production and increases new exploration programmes.

“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."

Subject to regulatory and other third party approvals, the sale and transfer of operatorship, which includes about 300 employees to Ineos, is expected this year.

Ineos chairman and chief executive officer Jim Ratcliffe said: "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."