BP PLC said Thursday it has raised its target for “structural cost reductions” by 2027 to $6.5-7.5 billion following a deal to divest its refinery and associated assets in Gelsenkirchen, Germany to Klesch Group.
With the sale to the Geneva-based refiner, BP will give up about 12 million metric tons of annual crude processing capacity and 265,000 barrels of daily crude distillation capacity, according to a BP press release.
“The deal includes Gelsenkirchen refinery and Bottrop tank farm; DHC Solvent Chemie GmbH (a subsidiary); interests in logistics joint ventures; and marketing businesses related to petrochemicals and unbranded B2B fuels produced at the Gelsenkirchen refinery”, the British energy giant said.
“To maintain BP’s regional supply requirements, BP has agreed offtake arrangements covering ground fuels, aviation fuel and coke”.
The complex mainly supplies fuels for vehicles and aircraft, as well as feedstock to petrochemical companies in Germany and Europe, according to BP.
“The experienced workforce, as well as those supporting logistics and sales infrastructure, are expected to join the new owner’s workforce upon completion of the deal”, BP said. “Today, the integrated refinery complex employs around 1,800 people”.
Klesch chair A. Gary Klesch said in a statement, “Our strategy is built around the long‑term stewardship of high-quality refining assets. Gelsenkirchen Refinery fits within that vision and provides a strong foundation for sustainable value creation”.
The parties expect to complete the transaction in the second or third quarter, subject to regulatory approvals. They did not disclose the price.
As a result of the agreement, BP for the third time increased its cost reduction aim set under a “reset” strategy it announced February 26, 2025. The addition of around $1 billion to the previous savings goal of $5.5-6.5 billion reflects underlying operating expenditure associated with the Gelsenkirchen assets.
“The transaction represents another significant milestone in BP’s acceleration of its strategy, including simplifying the portfolio, strengthening the balance sheet and focusing the downstream on its leading integrated businesses”, BP said.
The “reset” plan includes a divestment goal of $20 billion by 2027. For 2025 BP earlier reported $5.3 billion in “divestment and other proceeds”.
That included “amounts received from the sale of the U.S. onshore wind, Netherlands mobility and convenience and BP Pulse businesses”, BP said in its annual report. “Other proceeds for 2025 consist of $1.5 billion from the sale of non-controlling interests in the Permian and Eagle Ford midstream assets and $1.0 billion from the sale of a non-controlling interest in the subsidiary that holds our 12 percent share in the Trans-Anatolian natural gas pipeline”.
On December 24, 2025 BP announced a deal to sell 65 percent in the Castrol lubricants brand to Stonepeak Partners LP.
Castrol would become a joint venture under which BP retains 35 percent. “Following a two-year lock-up period, BP has optionality to sell its 35 percent stake in Castrol”, said a joint statement.
The transaction values Castrol at $10.1 billion. Net proceeds for BP would be around $6 billion, the statement said.
“All proceeds from this transaction will be allocated to reducing net debt towards BP’s target of $14-18 billion by end 2027”, the statement said.
BP expects the transaction with the New York City-based infrastructure investor to close this year.
To contact the author, email jov.onsat@rigzone.com
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