PetroChina to take 50% stake in INEOS refineries
1 Feb 2011
London – PetroChina has offered $1 billion to buy a 50% share of INEOS Group’s European refining business, which includes the refineries at Grangemouth in Scotland and Lavéra in France.
According to the UK group. the deal will improve the long-term sustainability of the INEOS refineries, enhance security of supply for customers and secure jobs and skills in both the UK and France
The deal would lead to a partnership between INEOS and PetroChina comprising a trading joint venture and a refining joint venture – both to be operated independently of the INEOS Group and be formed in Q2 2011.
“This new partnership will secure investment and the long-term sustainability of both sites in a highly competitive market and ensure we continue to be Europe’s leading independent crude oil refiner,” said Calum MacLean, CEO of INEOS Refining.
The Chinese offer is an important step on the way to INEOS forming a joint venture with PetroChina, according to Jim Ratcliffe, chairman of INEOS.
“We will have a strategic partner with significant refining expertise that is integrated upstream with very strong equity crude positions. This agreement allows us to remain fully committed to our refining business and presents us with an opportunity to further develop our technology business in China and beyond,” said Ratcliffe.
PetroChina is seeking to build a broader business platform in Europe, towards becoming a leading international energy company.
The geographic location and production capabilities of the INEOS refineries are very favourable as both refineries are well located in terms of markets and access to raw materials and both have a significant production bias towards diesel, which is the fastest growing refined fuel in Europe.
The Grangemouth refinery is located on the Firth of Forth with direct access to crude oil and gas from the North Sea. The Grangemouth refinery processes around 210,000 barrels of crude oil per day and provides fuel to Scotland, Northern England and Northern Ireland.
The Lavéra refinery processes 210,000 barrels of crude oil per day. It is located on the coast of the Mediterranean crude oil trading basin, next to the port of Marseille and adjacent to a crude oil terminal. The refinery supplies fuel by pipelines into France, Switzerland and southern Germany.
Both sites are integrated into INEOS’s downstream petrochemical production and remain strategic to its long-term business.
Following this announcement, there will be a period of employee consultation prior to the signing of a binding agreement, subject to the regulatory approvals.
