BP's unexpected transaction: involving 4 Chinese factories

According to BP's announcement, the transaction amount is subject to customary price adjustments. The sale is a strategic move to further reshape BP, which will further optimize BP's balance sheet and achieve the asset divestiture target one year earlier than originally planned.

According to the agreement, Ineos will pay BP 400 million US dollars as the first payment, and pay another 3.6 billion US dollars when the transaction is completed. The remaining USD 1 billion will be postponed in March, April and May 2021 in three separate payments of USD 100 million each time, and the remaining USD 700 million will be paid by the end of June 2021.

Among the factories sold are three factories located in Zhuhai, Chongqing and Nanjing in China. bp's shareholdings in these three factories are all over 50%.

Subject to regulatory approvals and other relevant approvals, the transaction is expected to be completed by the end of 2020.


Unexpected transaction

The surprising part of this transaction is that both the international oil company and the national oil company have been vigorously strengthening the integration of petrochemicals in recent years.

As for international oil companies, not long ago, Shell and ExxonMobil also announced that two large ethylene projects in Huizhou City, Guangdong Province were officially opened. These two major projects have invested billions and tens of billions of dollars, respectively, greatly enhancing the product launch capabilities of the two companies in China and the Asia-Pacific region.

In terms of the National Petroleum Corporation, Sinopec and PetroChina have continuously strengthened the layout of refining and chemical bases in China's coastal provinces in recent years; Saudi Aramco realized the acquisition of the Saudi basic industry of the petrochemical integration company last week. Completely turned into an oil company combining upstream and downstream.

"In terms of corporate strategy, the intersection of the chemical business and bp other businesses is limited, and a large amount of capital needs to be invested to develop these businesses." BPCEO Lu Bona said, "As we strive to build a more focused and more integrated bp , We will have other business opportunities that are more consistent with the future development direction."

As for the so-called "future development direction", the currently disclosed information is insufficient. Earlier this year, bp said to the outside world that it will change the company's business model to achieve its goal of becoming a net carbon company by 2050; the new coronary pneumonia epidemic and its economic impact have strengthened their changes Determination and accelerated this process.

However, as for the specific transformation measures and timetable, it will be announced at the bp capital market day event in September this year.


Heterogeneous oil companies

It is worth mentioning that in the field of petrochemicals, bp has always been a heterogeneous among major oil companies. For a long time, their investment has focused on aromatic hydrocarbons and acetyl, rather than ethylene and other olefins favored by major oil companies.

From the point of view of bp selling chemical business to achieve energy transformation, their relationship between the two is also different from other companies.

At present, the mainstream view of international oil giants is that the direction of chemical and energy transformation is the same.

ExxonMobil has stated that the demand for petrochemical products is more adaptable to the increasingly tight climate change regulations than the demand for gasoline and diesel products.

This is because the packaging made of chemicals extends the life of food and reduces the energy required for transportation; plastics are also used to improve the fuel efficiency of cars, and thermal insulation materials made of chemicals can reduce heating and cooling. The energy required.

If the main reason is not a conflict with the energy transition, then the more likely reason is the need for cash.

BP Chief Financial Officer Brian Gilvary said that through this agreement, the company achieved a $15 billion divestiture target one year ahead of schedule. At the same time, this transaction will also greatly improve the current bp balance sheet.

Since Lu Bona took over as bpCEO, the company has been on the road of transformation and internal reorganization.

In the financial statements, the pressure brought about by the energy transition is rising. After drastically lowering the long-term expectations for oil and gas prices, the valuation of some upstream assets and resources has been hit hard. Earlier this month, the company said it would write down assets of $13 billion to $17.5 billion in the second quarter.

Attachment: Factory sold in the agreement

Americas: Cooper River, South Carolina (PTA-bp 100%); Texas City, Texas (PX and m-xylene-bp 100%); Eastman bp Texas City production agreement (acetic acid); Atlas Methanol, Point Lisas, Trinidad and Tobago (methanol-bp 36.9%)

Europe: Hull, United Kingdom (acetic acid, acetic anhydride-bp 100%); Geel, Belgium (PTA, PX-bp 100%).

Asia: Zhuhai, China (PTA-bp 91.9%); Chongqing, China (acetic acid, acetates-bp 51%); Nanjing, China (acetic acid-bp 50%); Merak, Indonesia ( PTA-bp 100%); Kertih Town (Kertih), Malaysia (acetic acid-bp 70%); Ulsan City (UIsan), South Korea (acetic acid and vinyl acetate monomer-bp-50.9%); Taichung City (Taichung), Taiwan, China (PTA-bp 61.4%); Mai Liao, Taiwan, China (acetic acid-bp 50%).