INEOS to acquire the North Sea Forties Pipeline System and Kinneil terminal from BP for $250m
- INEOS now responsible for a strategic UK asset that delivers almost 40% of the UK’s North Sea oil and gas.
- 20% of the oil that passes down the pipeline feeds the INEOS refinery to provide 80% of Scotland’s fuel.
- Jim Ratcliffe Chairman and founder of INEOS says, “This is another very significant deal for INEOS. The acquisition reunites North Sea and Grangemouth assets under INEOS ownership. INEOS is now the only UK company with refinery and petrochemical assets directly integrated into the North Sea.”
INEOS has today announced that it has agreed to acquire the Forties Pipeline System (FPS) and associated pipelines and facilities from BP. The 235 mile Forties pipeline system links 85 North Sea oil and gas assets to the UK mainland and the INEOS site in Grangemouth in Scotland.
Under the terms of the agreement INEOS will pay BP a consideration of up to $250 million for the business, comprising a cash payment of $125 million on completion and an earn-out arrangement over seven years that could total $125 million.
On completion of the deal 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 transfer 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.
It is expected that around 300 people that operate and support the FPS business at Kinneil, Grangemouth, Dalmeny and offshore will become part of the INEOS Upstream business.
Jim Ratcliffe said: “The North Sea continues to present new opportunities for INEOS. The Forties Pipeline System is a UK strategic asset and was originally designed to work together to feed the Grangemouth refinery and petrochemical facilities. We have a strong track record of acquiring non-core assets and improving their efficiency and reliability, securing long term employment and investment. I am delighted that we can now bring this integrated system back under single ownership in INEOS.”
BP group chief executive Bob Dudley commented: “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 pursue further opportunities beyond these. While the Forties pipeline had great significance in BP’s history, our business here is now centred around our major interests west of Shetland and in the Central North Sea.
The pipeline has long been an important feedstock supplier to INEOS at Grangemouth. We believe that through also owning FPS, INEOS will be able produce greater efficiencies and help secure a competitive long-term future for this important piece of UK oil and gas infrastructure.”
20% of the oil that passes down the pipeline feeds the INEOS refinery to provide 80% of Scotland’s fuel.
The agreement further expands the INEOS Upstream business following the acquisition of the Breagh and Clipper South gas fields in the Southern North Sea from Letter1 in 2015, which currently supply gas to 1 in 10 British homes.
The acquiring entity will be INEOS FPS Limited, which forms part of INEOS Limited but is not part of the IGH SA Group.
The acquisition and transfer of operatorship is targeted to complete in Q3 this year, subject to the receipt of regulatory and other third party approvals.
Note to Editor.
Forties pipeline was opened in 1975 to transport oil from BP’s Forties field, the UK’s first major offshore oil field. Today FPS carries liquids production from some 85 fields in the Central and Northern North Sea and several Norwegian fields on behalf of 21 companies. In 2016, the pipeline’s average daily throughput was 445,000 barrels oil and some 3,500 tonnes of raw gas a day. The system has a capacity of 575,000 barrels of oil a day. BP sold its interests in the Forties field to Apache in 2003 and sold Grangemouth refinery and chemical plants to INEOS in 2005.
The FPS system primarily comprises a 169 kilometre (105 mile), 36” pipeline from the unmanned offshore Forties Unity platform to the onshore terminal at Cruden Bay. From there a 36” onshore pipeline transports the oil 209 kilometres (130 miles) south to the Kinneil facilities, adjacent to the Grangemouth refinery and chemical plant, where it is processed and stabilised before output is sent either for export via the Dalmeny terminal and Hound Point loading jetty or on to Grangemouth.
The deal includes the FPS business, including existing customer contracts, and assets including:
- Forties Pipeline System (100%)
- FPS equipment on Apache’s Forties Charlie platform.
- Forties Unity platform.
- BP’s interest in the GAEL N (54.3%), and GAEL S (30.5%) pipeline.
- 36” Forties sea-line.
- St Fergus-to-Cruden Bay natural gas liquids line.
- Cruden Bay terminal.
- 36” Cruden Bay-to-Kinneil land-line.
- Netherley, Brechin and Balbeggie pumping stations.
- Kinneil terminal.
- LPG storage and export at Grangemouth and Grangemouth docks.
- Kinneil-to-Dalmeny pipelines.
- Dalmeny tank farm and pipelines to Hound Point.
- Hound Point jetties.
Richard Longden (INEOS) 0041 21 627 7063 or 0041 7996 26123
Andrew McLachlan (Media Zoo) 020 7384 6980 or 07931 377162
Joseph Wade (Media Zoo) 020 7284 6980 or 07758 074576
Sareen Gosal (Media Zoo) 020 7384 6980 or 07522 490587