BP Agrees to Sell Majority Stake in Castrol for $6 Billion

Post by : Saif Nasser

BP has agreed to sell a 65% stake in its Castrol lubricants business to U.S.-based investment firm Stonepeak for about $6 billion. The deal is one of the biggest asset sales by the British oil company in recent years and forms a key part of BP’s wider plan to reduce debt and improve financial performance.

The agreement values Castrol at $10.1 billion. BP will keep a 35% stake in a new joint venture formed with Stonepeak, though it will have the option to sell this remaining share after a two-year lock-in period. The sale marks a major step in BP’s effort to simplify its business and focus more strongly on oil and gas, after years of weaker share performance compared with its rivals.

BP said the money from the deal will be used mainly to reduce debt. Around $800 million of the proceeds will be set aside for accelerated dividend payments to shareholders. The company has set a goal of selling $20 billion worth of assets by 2027 to bring its net debt down from $26 billion to between $14 billion and $18 billion.

Following the announcement, BP shares rose by more than 1%, showing investor approval of the move. After this deal, BP’s completed and announced asset sales now total about $11 billion, placing it more than halfway toward its divestment target.

Castrol, which is over 100 years old, is one of the world’s best-known lubricant brands. BP began reviewing the future of Castrol earlier this year as part of a wider strategy shift. The company has recently reduced its focus on renewable energy investments and is returning attention to its traditional oil and gas operations in an effort to boost profits.

Stonepeak confirmed that the Canada Pension Plan Investment Board will invest up to $1.05 billion as part of the deal, giving it an indirect stake in Castrol. Reports of talks between BP and Stonepeak first emerged in November, while the sale process began earlier in the year with interest from several investment firms.

The deal comes during a period of leadership change at BP. The company recently named Meg O’Neill as its next chief executive, while its new chair has said BP’s business had become too complex and needed faster action to improve returns.

With this sale, BP is sending a clear message that it wants to strengthen its balance sheet, reward shareholders, and sharpen its focus. The Castrol transaction is expected to play a central role in reshaping the company’s future direction.