Ineos Buys BP's UK Forties Pipeline System

Swiss-registered petrochemicals firm Ineos has bought BP's UK Forties Pipeline System (FPS) for £250mn ($312mn), the two companies said April 3, subject to regulatory and other third-party approvals. Half the money is to be paid on completion and the rest over seven years.

Built in 1975, FPS carries liquids production from some 85 fields in the Central and Northern North Sea and several Norwegian fields on behalf of around 40 companies. The system has a capacity of 575,000 barrels of oil/day. BP sold its interests in the Forties field to Apache in 2003 but not the (then) very valuable pipeline assets; and sold the Grangemouth refinery and chemical plants to Ineos in 2005.

On completion of the deal the ownership and operation of FPS, the Kinneil terminal and gas processing plant, the Dalmeny terminal, sites at Aberdeen, the Forties Unity Platform and associated infrastructure will transfer to Ineos as fully operational units, at which point Ineos will be responsible for a strategic UK asset that delivers almost 40% of the UK’s North Sea oil and gas

BP said the gross assets that are the subject of this transaction amounted to $816mn as at 31 December 2016. For the year ended 31 December 2016, a loss of $169mn arose in relation to these assets. As part of the agreement, Ineos will also assume all decommissioning liabilities.

BP CEO Bob Dudley (pictured below) said: "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."

(Credit: BP)

Ineos said a fifth of the oil that passes down the pipeline feeds the Ineos refinery to provide four fifths of Scotland’s fuel. CEO Jim Ratcliffe said the deal "reunites North Sea and Grangemouth assets under Ineos ownership. Ineos is now the only UK company with refinery and petrochemical assets directly integrated into the North Sea.” With the deal come all the transportation contracts and staff.

William Powell