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'BP is parting ways with a controlling share of its iconic engine oil business. The British oil and gas major announced on Wednesday, Dec. 24, that it has agreed to sell a 65 percent stake in Castrol to US infrastructure group Stonepeak. The transaction values the lubricants division at $10.1 billion, including debt.
Under the terms of the agreement, BP will retain a 35 percent interest in the century-old brand through a joint venture. The company expects to receive approximately $6 billion from the sale, stating that the entire amount will be used to pay down its gross debt, which stood at $26.1 billion at the end of the third quarter.
"The sale marks an important milestone in the ongoing delivery of our reset strategy," interim chief executive Carol Howle said in a statement regarding the deal. "We are reducing complexity, focusing the downstream on our leading integrated businesses and accelerating delivery of our plan."
The divestment is the company's largest to date and part of a broader pledge to sell $20 billion in assets by 2027. This strategy comes amid mounting pressure from activist hedge fund Elliott Management, which has urged the FTSE 100 group to cut costs and deleverage its balance sheet. The deal follows a period of significant turbulence and leadership changes for BP.
New chairman Albert Manifold, the former CEO of CRH who joined in October, is rapidly reshaping the company. Just last week, BP announced that Woodside Energy boss Meg O'Neill would replace Murray Auchincloss as chief executive in April. O'Neill's appointment follows a failed attempt by previous leadership to pivot the company toward renewable energy. Manifold noted O'Neill would help make BP a "simpler, leaner, more profitable company."
Stonepeak, a New York-based firm with $80 billion in assets, previously struck a deal with O'Neill's former employer, Woodside, earlier this year. The Castrol transaction is expected to close at the end of 2026. While BP keeps a minority hold, the agreement includes an option to offload the remaining shares after a mandatory two-year lock-up period.
