It is the oil giant's second major disposal to INEOS, the vehicle of Jim Ratcliffe (reportedly Britain’s richest man), which bought BP's chemicals and refineries operations in a company-making deal in 2005.
BP’s petrochemicals arm employs over 1,700 staff worldwide and these people are expected to transfer to INEOS on completion of the sale.
The petrochemicals operation is focused on two main businesses - aromatics and acetyls, but BP said it has little in common with the rest of the group
"Strategically, the overlap with the rest of bp is limited and it would take considerable capital for us to grow these businesses,” said the FTSE 100-listed stalwart.
INEOS is paying US$400mln upfront and a further US$3.6bn on completion with the final payment of US$1bn to be made in instalments through to 2021, the oil major added.
Bernard Looney, BP’s chief executive officer commented: "This is another significant step as we steadily work to reinvent BP."
INEOS is best known as the owner of the Grangemouth refinery in Scotland but made its name with the acquisition of BP’s chemicals division Innovene for US$9bn in 2005.
Brian Gilvary, BP's chief financial officer, said: "With today's announcement we have met our $15 billion target for agreed divestments a full year ahead of schedule, demonstrating the range and quality of options available to us."
"bp has had a long relationship with INEOS and this agreement reflects the mutual respect and trust that exists between us."
Under Lookney's direction, BP has undertaken a determined shift toward sustainable fuel.
Earlier this month, it announced a write-off of up to US$17.5bn as it reassessed its forecasts of the long-term oil price.
Provisions against the exploration portfolio were a substantial part of this charge.
Liz Dhillon, an equity research analyst at wealth manager Quilter Cheviot, said: “This is not the first time BP has sold parts of its business to INEOS. In 2005 BP sold a number of assets, including its olefin and derivatives business, for US$9bn.
"Even with the sale helping BP’s credit profile, we still see a c50% dividend cut as likely. A 60% cut would put the yield in line with Shell at around 4.4% compared to 11% currently.
“Despite headwinds it is facing and the potential for weaker demand for energy over a sustained period, BP still has the financial and operational strength and flexibility to see it through the current extreme environment."
BP shares rose 3.5% to 315.3p.
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