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* Acquisition by Ineos expected to complete by year-end
* BP boss Looney preparing company for energy transition
* Petrochemicals seen as key driver in oil demand growth
* BP shares up 2.5%
(Recasts, updates throughout)
By Ron Bousso
LONDON, June 29 (Reuters) - BP has agreed to sell its
global petrochemicals business to billionaire Jim Ratcliffe's
Ineos for $5 billion, pulling out of a sector widely seen as a
key driver of oil demand growth in the coming decades.
The surprise move means BP has hit its $15 billion asset
sales target a year ahead of schedule as CEO Bernard Looney
prepares the company for a shift to low-carbon energy.
The company's London-listed shares moved higher after the
news, rising about 2.5% by 1057 GMT.
Looney acknowledged that the sale of the business, which
employs 1,700 people and produced 9.7 million tonnes of
petrochemicals last year, "will come as a surprise".
"Strategically, the overlap with the rest of BP is limited
and it would take considerable capital for us to grow these
(petrochemical) businesses," Looney said in a statement.
"Today's agreement is another deliberate step in building a
BP that can compete and succeed through the energy transition."
The business includes stakes in manufacturing plants in the
United States, Trinidad and Tobago, Britain, Belgium, China,
Malaysia and Indonesia. The petrochemical plant attached to BP's
oil refineries in Gelsenkirchen and Mulheim in Germany are not
included.
Plastics and other petrochemical products will drive global
oil demand to 2050, offsetting slower consumption of motor fuel,
the International Energy Agency (IEA) said in a 2018 report.
BP sold the bulk of its petrochemicals business in 2005 to
Ineos, which has a network of more than 180 sites in 26
countries and about 22,000 employees.
Looney took office in February and quickly set out a plan to
reinvent BP by shifting its focus from oil and gas to low-carbon
energy and renewables. He has since announced plans for a sharp
reduction in the company's carbon emissions by 2050 and a major
restructuring of the 112-year-old
company.
BP also announced plans to cut 2020 spending by 25% and axe
10,000 jobs as the coronavirus-related collapse in energy
consumption accelerates the company's transition plans.
Ineos will pay a deposit of $400 million and a further $3.6
billion on completion of the deal, which is expected by the end
of the year. The remaining $1 billion will be paid in
instalments in 2021.
"This acquisition is a logical development of our existing
petrochemicals business, extending our interest in acetyls and
adding a world leading aromatics business supporting the global
polyester industry," Ineos Chairman Ratcliffe said in a
statement.
(Reporting by Yadarisa Shabong in Bengaluru
Editing by Arun Koyyur and David Goodman)
