BP to Sell German Refinery as Streamlining Efforts Continue -- Update

By Adam Whittaker

BP agreed to sell its Gelsenkirchen refinery in Germany to Klesch Group, as the British energy major continues to simplify its portfolio and shore up its balance sheet.

The company didn't disclose the terms or price of the transaction.

BP is proceeding with a strategic reset and refocusing its spending on oil and gas production. At the same time, it is cutting costs and selling some assets in a bid to reduce its burdensome debt.

When BP's new Chairman Albert Manifold took over last year, he told staff that the business was overly complex and suggested more assets could be sold off. BP has made simplifying its portfolio a core part of its strategy and hopes it will make the business more profitable. The company had previously said it was looking to sell the refinery.

As a result of the sale, BP increased its structural cost reduction target by around $1 billion to between $6.5 billion and $7.5 billion by 2027. This reflects expected savings from underlying operating expenditure associated with the plant, it said.

The move follows an agreement in December to sell a 65% stake in its Castrol lubricants business to Stonepeak for $8 billion. Last month it said it had announced or completed more than $11 billion of its 2027 $20 billion divestment target.

The Gelsenkirchen refinery in western Germany produces fuels for vehicles and aircraft as well as feedstocks for the petrochemical industry. It employs around 1,800 people, BP said.

The deal is expected to close in the second half of the year.

Write to Adam Whittaker at [e-mail]

(END) Dow Jones Newswires

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