INEOS buys BP’s Forties pipeline system for $250m as oil major re-focuses on N. Sea exploration

BP Forties pipeline
BP Forties pipeline

INEOS – the company which owns the Grangemouth petro-chemicals plant – has bought the Forties Pipeline System (FPS) and Kinneil Terminal from BP for $250 million.

This means INEOS is now responsible for a strategic UK asset that delivers almost 40% of the UK’s North Sea oil and gas.

The pipeline system is 235 miles in length and links 85 North Sea oil and gas assets to the INEOS Grangemouth site. 20% of the oil that passes down the pipeline feeds the INEOS refinery to provide 80% of Scotland’s fuel.

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.

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.

Jim Ratcliffe Chairman and founder of INEOS said: “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.”  

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 west of Shetland 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.”

Mark Thomas, BP North Sea Regional President said: “This allows us to further focus our North Sea business around our core offshore assets – bringing new fields into production, redeveloping and renewing existing producing facilities and acquiring and exploring new acreage and interests through licence rounds and farm-ins.

“As with our recent agreement with EnQuest, we believe this is a good example of having the ‘right assets’ in the ‘right hands’, offering new opportunities for the assets and benefitting the UKCS, in the spirit of the government’s aim of maximising economic recovery of the UK’s oil and gas resources.”

The 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 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 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.

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