PetroChina offers $1bn for 50% share in INEOS refining

LONDON (ICIS)--INEOS has been offered $1bn (€740m) by PetroChinafor a 50% share in its European refining operation, it said on Monday.

The business includes the refineries at Grangemouth in Scotland and Lavera in France.

“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 partnership with PetroChina, for which a framework agreement was entered on 10 January 2011, would comprise a trading joint venture (JV) and a refining JV, INEOS added.

“This offer is an important step on the way to forming a strategic partnership with PetroChina,” said INEOS chairman Jim Ratcliffe.

Ratcliffe added that the JV would allow INEOS to remain fully committed to its refining business as well as present opportunities to further develop its interests in China.

Core to INEOS was an agreement signed with PetroChina’s ultimate parent company, China National Petroleum Corporation (CNPC) to share refining and petrochemical technology and expertise. The agreement gives INEOS the opportunity to lever its technology and expertise into the China market.

In addition, the JV would aid PetroChina’s strategy of building a broader business platform in Europe and of becoming a leading international energy company, INEOS said.

The geographic location of the refineries are strategically important – Grangemouth provides utilities for essential UK pipeline links with gas fields in the North Sea and provides most of Scotland’s gasoline, while Lavera supplies fuel by pipelines into France, Switzerland and southern Germany.

INEOS and PetroChina would now work towards forming the proposed JVs in the second quarter of 2011.

“We now intend to evaluate our future refinancing options for the group over the first half of 2011,” Ratcliffe said.

A new Swiss company would be incorporated to hold the INEOS investment, while the two JVs would be operated independently of the INEOS Group, it said.

INEOS Refining is Europe’s largest independent oil refiner with an annual turnover of about $15bn. The Grangemouth and Lavera refineries, formerly owned by BP, can process 410,000 bbl/day of crude to produce about 20m tonnes of fuels a year.

($1 = €0.74)