The two companies confirmed the discussions, but declined to comment on the potential value of the deal or provide a time frame. The pipeline system transports 450,000 barrels a day, comprising about 40 percent of the U.K.’s total oil production and the largest constituent of Dated Brent, the international crude benchmark.
BP, Europe’s third-biggest oil company, is selling assets to help pay for the 2010 oil spill in the U.S. Gulf of Mexico, for which it has set aside more than $50 billion. It also needs to bring down debt and maintain dividends as oil prices continue to trade near $50 a barrel. It sold its stake in the Central Area Transmission System natural-gas transportation system in the U.K. North Sea in 2015 for 324 million pounds ($400 million).
BP owns all of the Forties pipeline system. It was originally built to transport oil from the Forties field, which was discovered in 1970, to the Grangemouth refinery near Edinburgh in Scotland. In the following decades additional discoveries were connected to the system including Buzzard, currently the nation’s largest field. BP sold the Forties field to Apache Corp. and the refinery to Ineos last decade, while retaining control of the pipeline system.
The network transports oil from the offshore platform to the onshore terminal at Cruden Bay, from where the crude is pumped south to the Kinneil facilities, adjacent to the Ineos-operated Grangemouth refinery and chemical plant.
Petrochemical producer Ineos has been expanding in oil and gas exploration, buying a portfolio of 15 U.K. licenses from Engie SA earlier this year. It has also emerged as the lead bidder for Dong Energy A/S’s exploration and production unit in the North Sea, people familiar with the matter said this week.