BP to sell North Sea pipeline to Ineos ?

Ineos, the UK petrochemicals group, is in talks with BP to buy the Forties pipeline system, one of the most strategically important pieces of infrastructure in the North Sea.

The Forties network is made up of about 100 miles of pipeline and handles around 450,000 barrels of oil a day - equivalent to 40 %of UK production - from 80 different oilfields. Ineos depends on the Forties pipeline for supplies to its Grangemouth refinery, which it bought from BP in 2005 and which remains Scotland’s biggest industrial facility.

A sale of the pipeline system would complete BP’s withdrawal from assets that once formed the heart of its operations after North Sea oil production took off in the 1970s. The Forties oilfield was one of the first large oil discoveries beneath UK waters and remains a big producer for Apache, the US company that bought the field from BP in 2003. BP and Ineos both confirmed the talks.

A deal would mark the latest step in BP’s efforts to sell older North Sea assets and highlight the wider retreat by the biggest oil and gas groups from one of the world’s most mature and high-cost offshore basins. However, BP has not given up on the UK continental shelf; it is making multibillion-pound investments in an expansion of its Clair Ridge and Schiehallion fields west of the Shetland Islands. BP has been looking for a buyer for the Forties pipeline system for more than a year. Finding a committed long-term investor in the infrastructure was crucial to the wider health of the North Sea industry because of its integral position in the web of interconnecting pipelines that take oil ashore. Industry leaders have long been worried that a lack of investment in North Sea infrastructure could accelerate the decline in the basin if existing oilfields and untapped resources were left stranded when old pipelines were decommissioned. A deal with Ineos would also signify the company’s growing importance within the UK industrial sector.