BP has agreed to sell a majority stake in its Castrol motor oil business for $6bn (£4.4bn), marking a significant step in its effort to reduce debt and refocus on its core oil and gas operations.
Deal Structure And Valuation
The London-based energy group said it will sell a 65% stake in Castrol to New York investment firm Stonepeak. The transaction values Castrol at $10.1bn (£7.5bn) and will see BP receive $6bn in cash. BP will retain a 35% stake in the lubricants business, which it has controlled since 2000.
Castrol produces lubricants for cars, motorcycles, and industrial vehicles. BP said the cash proceeds will be used to pay down debt and support a tighter focus on its main business activities.
Asset Sales And Strategic Refocus
The Castrol transaction is part of BP’s previously announced plan to sell $20bn (£15bn) of assets. In February, the company said the divestment programme was designed to strengthen its balance sheet and concentrate investment on crude oil and gas. BP said that, including this deal and earlier announcements, it is now more than halfway toward reaching that target.
BP has also been adjusting its investment priorities away from green energy. The shift follows pressure from some investors who have been dissatisfied with BP’s profits and share price performance compared with competitors. Rivals such as Shell and Equinor have also scaled back green energy investment plans. In the United States, President Donald Trump has publicly encouraged increased fossil fuel production, adding support for renewed oil and gas investment.
Leadership Changes And Recent Disposals
The Castrol sale was announced a week after BP named its first female chief executive, Meg O’Neill, who is set to take the role in April 2026. Her appointment came three months after BP named a new chairman, Albert Manifold. O’Neill was appointed less than two years after Murray Auchincloss succeeded Bernard Looney as chief executive.
The company has completed several other disposals in recent months, including the sale of its US onshore wind energy business and its Dutch mobility and convenience arm.
Market And Investor Response
Interim chief executive Carol Howle said the transaction was a positive outcome for stakeholders, adding that BP was reducing complexity, narrowing its downstream focus, and moving forward with its stated plans.
Russ Mould, investment director at AJ Bell, said the proceeds would allow BP to reduce its debt burden and move closer to its goal of completing $20bn of divestments by 2027.
Shares in BP rose at the opening of trading on Wednesday following the announcement but later gave up most of those gains.
Featured image credits: Wikimedia Commons
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