BP has agreed to sell its global petrochemicals business to billionaire Jim Ratcliffe's Ineos for $5 billion, pulling out of a sector widely seen as a key driver of oil demand growth in the coming decades. 

The surprise move means BP has hit its $15 billion asset sales target a year ahead of schedule as chief executive Bernard Looney prepares the company for a shift to low-carbon energy. 

Progress towards the sales target had taken a dent after BP had to renegotiate terms of its sale of two oil and gas portfolios in Alaska and the North Sea in recent months in light of the unprecedented demand slump triggered by the Covid-19 pandemic. 

Irishman Bernard Looney acknowledged that the sale of the business, which employs 1,700 people and produced 9.7 million tonnes of petrochemicals last year, "will come as a surprise".

"Strategically, the overlap with the rest of BP is limited and it would take considerable capital for us to grow these (petrochemical) businesses," he said in a statement. 

"Today's agreement is another deliberate step in building a BP that can compete and succeed through the energy transition," he added. 

The business includes stakes in manufacturing plants in the US, Trinidad and Tobago, Britain, Belgium, China, Malaysia and Indonesia. 

The petrochemical plants attached to BP's oil refineries in Gelsenkirchen and Mulheim in Germany are not included.  

Plastics and other petrochemical products will drive global oil demand to 2050, offsetting slower consumption of motor fuel, the International Energy Agency (IEA) said in a 2018 report.

BP's petrochemicals business was smaller relative to rivals such as Exon Mobil and Royal Dutch Shell after it sold a large part of its operations in 2005 to Ineos, which today has a network of more than 180 sites in 26 countries and about 22,000 employees. 

That left BP's petrochemicals business focused on aromatics, which are used in polymers for plastic bottles and packaging, and acetyles, which are used in paints, solvents and pharmaceuticals. 

However, growing consumer concern over marine pollution from chemicals has made those sectors a less likely long-term bet for BP as it focuses on improving its green credentials. 

Analysts said the decision to offload those now is a "positive change" for BP because of the limited overlap with its other operations. It also strengthens expectations that BP will not cut its dividend, they added. 

Bernard Looney took office in February and quickly set out a plan to reinvent BP by shifting its focus from oil and gas to low-carbon energy and renewables.

He has since announced plans for a sharp reduction in the company's carbon emissions by 2050 and a major restructuring of the 112-year-old company. 

BP also announced plans to cut 2020 spending by 25% and axe 10,000 jobs as the coronavirus crisis accelerates the company's transition plans. 

Ineos will pay a deposit of $400m and a further $3.6 billion on completion of the deal, which is expected by the end of the year. The remaining $1 billion will be paid in instalments in 2021. 

"This acquisition is a logical development of our existing petrochemicals business, extending our interest in acetyls and adding a world leading aromatics business supporting the global polyester industry," Ineos chairman Ratcliffe said in a statement.