British energy group BP, hit hard by the coronavirus pandemic slashing demand for oil, announced Monday the sale of its petrochemical business to rival Ineos for US$5.0 billion.
“The agreed sale … will further strengthen BP’s balance sheet and delivers its target for agreed divestments a year earlier than originally scheduled,” a statement said.
BP chief executive Bernard Looney added: “I recognize this decision will come as a surprise and we will do our best to minimize uncertainty. I am confident, however, that the businesses will thrive as part of Ineos, a global leader in petrochemicals.”
BP said that 1,700 staff employed by its petrochemical business worldwide were expected to transfer to Ineos on completion of the sale that meets a $15-billion divestment target one year early.
“Today’s agreement is another deliberate step in building a BP that can compete and succeed through the energy transition,” Looney added.
The Irish national, who became CEO of BP in February, is targeting “net zero” carbon emissions for the company by 2050.
In the immediate future, BP must rebuild its finances, having said earlier this month that it would take a hit of up to $17.5 billion in the second quarter.
With the coronavirus fallout ravaging global oil demand, BP has decided also to cut about 10,000 jobs, or 15% of its global workforce.
After companies worldwide closed their doors and airlines grounded planes at the height of the Covid-19 outbreak towards the end of the first quarter, oil prices dropped off a cliff, causing them to briefly turn negative.
Prices have however rebounded sharply in recent weeks as governments ease lockdowns and businesses slowly reopen.