The dollars 1bn merger, formally expected to be announced in January, follows months of talks aimed at setting up close trading links in a range of petrochemicals.
It is understood that their discussions have progressed much further than originally envisaged and the two sides are close to signing a full merger of their styrenes businesses.
The 50-50 joint venture will have a combined annual turnover of dollars 1bn (pounds 600m) and speak for about 22 per cent of the European market in styrenes, an important feedstock for plastics packaging and rubber products.
It will be Europe's second biggest styrenes producer after BASF of Germany.
The expected merger is the first such move by BP's chemicals division and is part of a restructuring plan aimed at improving its financial performance. In the first half to 30 June, BP Chemicals made an operating loss of pounds 21m against a pounds 62m profit last time.
A BP Chemicals spokesman said: 'The talks are progressing well and are aimed at building a strategic alliance with Enichem.'
The move is in response to massive overcapacity in European petrochemicals, which has forced other multinationals to explore mergers and strategic alliances.
Last month Shell, the world's biggest petrochemicals company, announced it was planning a merger of its polyoelfins (also used in plastics) business with Italy's Montedison.
Details have yet to be finalised, but the merger would create a business with turnover of dollars 3.6bn and a European market share of about 20 per cent.
Both Shell's and BP's proposals will require clearance from the European Commission, which is understood to accept the need for a shake-up of the industry.