Oil giant BP (NYSE:BP) has agreed to sell its global petrochemicals business to leading chemicals company INEOS for $5 billion. The sale caps the company's plan to monetize $15 billion in assets, which it has now achieved one year ahead of schedule. The cash proceeds will enable the oil company to further strengthen its balance sheet and continue its strategic reimagining. 

INEOS will pay BP a $400 million deposit for the petrochemical assets and another $3.6 billion when the deal closes, which the companies expect will happen by year-end. INEOS will pay the remaining $1 billion in separate installments of $100 million in March, April, and May of 2021 and the remaining $700 million in June of next year.

Two people shaking hands with an energy facility in the background.

Image source: Getty Images.

BP deemed these assets as nonstrategic since there was limited overlap with the rest of its businesses. Furthermore, the company also would have needed to invest a lot of money to grow these businesses, which would have taken capital away from other opportunities that are more aligned with its strategic direction.

Meanwhile, the $5 billion cash infusion will enable BP to bolster its balance sheet, which has come under pressure due to this year's crash in crude prices. The company recently unveiled plans to write down as much as $17.5 billion in assets due to its belief that energy prices will remain low for a sustained period. That view caused some concerns that BP might need to reduce its dividend, which has seen its yield rise into the double digits on sustainability concerns. But this sale should help ease some of those worries as it will relieve some of the company's balance sheet pressure.