BP has agreed a $5bn (£4bn) deal to sell its petrochemicals business to Sir Jim Ratcliffe’s Ineos.
The oil company said the sale of the non-core arm allowed it to complete its $15bn asset sale target a year ahead of schedule.
Energy firms are rushing to cut spending amid a coronavirus crisis demand slump at a time of intense pressure to lower emissions.
The petrochemicals unit is focused on two main businesses; aromatics – key to fibres, films and packaging – and acetyls which support products such as paints, adhesives and packaging.
It has 15 manufacturing sites across Asia, Europe and the United States.
The business, which will sit within the Styrolution unit at Ineos, employs 1,700 people who are all expected to transfer across.
Chief executive Bernard Looney said of the deal: “Strategically, the overlap with the rest of BP is limited and it would take considerable capital for us to grow these businesses.”
Its London-listed shares rose 1.5% on the news, following earlier pressure on energy stocks more generally as oil prices fell on growing fears of extended disruption from the pandemic.
BP said the deal would see Ineos pay a deposit of $400m and another $3.6bn on completion of the deal, which is expected by the end of the year.
The remaining $1bn would be paid in instalments next year.
Sir Jim said: “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.”