BP has agreed to sell its interests in ethylene and polyethylene production in Malaysia to PETRONAS.

The agreement concerns BP's 15 per cent interest in Ethylene Malaysia Sdn Bhd (EMSB) and 60 per cent interest in Polyethylene Malaysia Sdn Bhd (PEMSB), both of which are operated by PETRONAS, and are located at Kertih, on the east coast of Malaysia. This announcement does not affect BP's other businesses in Malaysia.

Under the terms of the agreement, PETRONAS will, at closing, pay $363m in cash to BP, inclusive of a balance sheet adjustment of $13m and the repayment of a shareholder loan of $53m. Subject to certain conditions, both parties anticipate completing the transaction by the end of 2010. Additionally, BP will also receive an EMSB pre-closing dividend payment amounting to $48m, subject to EMSB Board approval.

Sue Rataj, President of BP's Global Petrochemicals Business, said: ''Whilst these are attractive businesses with strong domestic and regional markets, BP recognizes that PETRONAS is their natural owner, with various integration opportunities uniquely available to them at the Kertih site. BP will continue to focus on the development and expansion of our olefins and derivatives business in China, and other large rapidly growing markets, and pursue opportunities in China and India to extend our leading world positions in aromatics and acetyls.''

EMSB's olefins cracker, commissioned in 1995, has production capacity of approximately 440,000 tonnes per annum (tpa) of ethylene, a basic petrochemical feedstock. The company is owned by PETRONAS (72.5 per cent), BP (15 per cent) and Idemitsu (12.5 per cent). PEMSB, whose polyethylene plant also began operation in 1995, is owned by BP (60 per cent) and PETRONAS (40 per cent). The plant has a production capacity of some 318,000 tpa of polyethylene, used primarily for packaging and film manufacture. Ethylene feedstock for the plant is supplied by EMSB.

Tags: BP PLC, PETRONAS