SINGAPORE (ICIS)--INEOS is acquiring the Forties Pipeline System (FPS) and Kinneil Terminal from BP for $250m, the two firms said on Monday.
The acquisition and transfer of operatorship is expected to be completed in the third quarter of this year, Switzerland-headquartered petrochemical major INEOS said in a statement.
The 235 mile FPS links 85 North Sea oil and gas assets to the UK mainland and the INEOS site in Grangemouth in Scotland, the chemicals producer said.
The FPS is currently 100% owned by BP and transports oil and gas liquids with a nominal capacity of more than 1m bbl/day.
The pipelines already transports gas liquids to INEOS’ site in the north of the UK, Grangemouth in Scotland.
INEOS will pay BP a consideration of up to $250m which will consist of a cash payment of $125m on completion and an “earn-out arrangement” over seven years that could total $125m, the firm said.
Once the deal is completed, 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 be transferred to INEOS, according to INEOS.
“These assets will transfer 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,” the company said.
The FPS was originally designed to work together to feed the Grangemouth refinery and petrochemical facilities, according to INEOS.
“BP is returning to growth in the North Sea as we bring important new projects, including the Quad 204 redevelopment and Clair Ridge, into production and increase new exploration,” BP group CEO Bob Dudley 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,” he added.
The sale will not affect BP’s existing rights to capacity in FPS, BP said in a separate statement.
“Proceeds from the sale will be used by BP for general corporate purposes,” the energy major added.
(Picture above: Part of the Forties network. Source: BP. North Sea oilfield map source: EIA)