BP sells petrochemical business to INEOS for $5bn

The oil giant shocked the market as it announced the surprise sale to help boost its balance sheet

Article updated: 29 June 2020 12:00pm Author: Ian Forrest

  • CEO Bernard Looney said it would take considerable capital investment to grow the petrochemicals business
  • The deal is expected to complete by the end of the year which would mean that BP had achieved its $15bn target for disposals ahead of schedule
  • Recommendation: The shares do represent good long term value for investors so we maintain our ‘Buy’ recommendation for investors willing to accept a medium level of risk

Oil giant BP today surprised the market by announcing the sale of its petrochemicals business to INEOS for $5bn. The CEO Bernard Looney said it would take considerable capital investment to grow the petrochemicals business. The fall in the oil price during the coronavirus pandemic has led many oil majors to change their strategies and BP decided earlier in the year to reduce its costs and capital expenditure. The deal is expected to complete by the end of the year which would mean that BP had achieved its $15bn target for disposals ahead of schedule.

The market reacted positively to the news with the shares rising 3%, although they are still 33% down on the year so far. Given all the uncertainty around global economic prospects, the shares are likely to remain volatile for some time. While the deal is a good one and should help the company to reduce its relatively large debts, the news needs to be seen alongside the company’s recent reduction in its long-term expectations for the price of Brent crude. Dividends could be cut in early August when second quarter results are due. However, the shares do represent good long term value for investors so we maintain our Buy recommendation for investors willing to accept a medium level of risk.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

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Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.