BP sells 65% stake in Castrol lubricants to Stonepeak for US$6 bn

UK oil major BP has agreed to sell a 65% stake in its Castrol lubricants business to US private equity firm Stonepeak for about US$6 billion, a significant step in the oil major’s US$20 billion divestment plan aimed at cutting debt and boosting returns, says a Reuters report.

The deal values Castrol at US$10.1 billion, and marks the British company’s most ambitious asset sale so far in its efforts to streamline operations and scale back its renewable energy investments after years of lagging rivals in share performance.

BP will retain a 35% stake in a new joint venture with Stonepeak, which it can sell after a two-year lock-in period.

The sale, which includes us$800 million for accelerated dividend payments, comes after BP put the century-old lubricants unit under review earlier this year as part of a broader strategy to focus on its core oil and gas business.

BP will use the sale proceeds to reduce debt and expects the deal to complete by the end of 2026, it said.

The oil major to sell US$20 billion worth of assets to help slash its net debt from US$26 billion to between US$14 billion and US$18 billion by the end of 2027.

Stonepeak, an infrastructure-focused private equity firm, has investments in hard assets such as energy businesses and real estate and seeks assets that offer growth over the long-term.