BP Withdraws From Global Chemical Business.

BP (BP) announced in June 29th that it had agreed to sell its global chemical business to 5 billion dollars for the price. The amount is limited by customary price adjustment.

According to the agreement, BP will pay US $400 million as the first payment and pay US $3 billion 600 million when the transaction is completed. The remaining $1 billion will be postponed in March 2021, April and May, three times, 100 million dollars per time, and the remaining 700 million dollars before the end of June 2021. The transaction is expected to be completed by the end of 2020, subject to regulatory authorities and other related approvals.

BP's chemical business mainly focuses on two major areas, aromatics and acetyl, and each business area has a leading technology and strong production plant and has strong performance in the Asian market. BP has the rights and interests of a total of 14 production plants in Asia, Europe and the United States. In 2019, a total of 9 million 700 thousand tons of chemical products were produced.

BP group chief executive Lu Bona (Bernard Looney) said: "this is another important step for us to steadily rebuild BP. Our chemical industry is a leader in its own field, with world-class technology, factories and talents. In recent years, the performance of the chemical industry has been improving and has created a highly competitive return for the company. At present, the growth potential is huge, and the related business of recycling economy is also expanding.

It is the world's leading chemical company. Its business is located in 26 countries, with more than 180 factories and around 22000 employees worldwide. In the past 20 years, BP has bought many businesses from the company. The most striking thing is that in 2005, Innovene acquired BP, a subsidiary of Innovene for $9 billion. Its main businesses included most chemical plants and two refineries at that time.

Brian Gilvary, chief financial officer of BP group, said: "through the agreement signed today, we have achieved the target of divestiture of US $15 billion a year in advance, showing the scope and quality of the assets of the company". (Brian)

It is understood that so far, BP has signed a total of 15 billion US dollars in divestiture and other asset disposal plans in 2019 and 2020, which originally planned to achieve this goal in mid 2021.

As of December 31, 2019, the underlying assets of the transaction amounted to US $3 billion 496 million. In the fiscal year ended December 31, 2019, the pre tax replacement cost related to these assets was $396 million.