INEOS buys Forties pipeline, Kinneil Terminal

INEOS has bought the Forties Pipeline System (FPS) in the North Sea and the Kinneil Terminal, along with associated pipelines and facilities from BP in a deal worth up to US$250m.

The FPS transports 40% of the UK’s oil production, around 450,000 bbl/d, and connects 85 North Sea oil and gas assets to the UK mainland and INEOS’ Grangemouth petrochemicals site. 20% of the oil that passes through it feeds INEOS’ Grangemouth refinery, which provides 80% of vehicle fuel in Scotland.

The company will pay an initial US$125m in cash to BP, with further payments of up to US$125m over the next seven years linked to earnings. The deal includes the ownership and operation of the 380 km FPS, the Forties Unity Platform through which the pipeline is routed, the Kinneil terminal and gas processing plant at Grangemouth which processes crude from the pipeline, the Dalmeny terminal, various sites at Aberdeen, and associated infrastructure. Around 300 BP employees at the sites will join 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,” said INEOS chairman and founder Jim Ratcliffe, adding: “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.”

The acquisition continues INEOS’ move upstream. In recent months it began to import shale gas from the US, and in 2015, it bought 12 North Sea gas fields, including the Breagh and Clipper South fields.

BP CEO Bob Dudley said that while the FPS was of historical importance to BP, the company’s business focus has changed to its interests west of Shetland and 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 to realise greater integration benefits and help secure a competitive long-term future for this important piece of UK oil and gas infrastructure,” he said.