19th Mar 2026 08:33
(Alliance News) - BP PLC on Thursday said it has agreed to sell its Gelsenkirchen refinery and related assets in Germany to Klesch Group Ltd, as part of its strategy to simplify its portfolio and strengthen its balance sheet.
BP didn't provide the sale price of the refinery, saying the terms of the agreement are confidential. It said the deal is expected to close in the second half of the year.
The London-based oil major said the disposal will increase its structural cost-reduction target by around USD1 billion to between USD6.5 billion and USD7.5 billion by 2027, reflecting lower operating expenditure linked to the refinery.
This marks the second time BP has increased its cost-savings target, having outlined USD4 billion to USD5 billion of savings in February 2025, and increasing this in February this year to between USD5.5 billion and USD6.5 billion, reflecting the outcome of the strategic review of Castrol.
In December, BP said it will receive proceeds of around USD6 billion from the sale of a 65% stake in its lubricants brand Castrol to private equity firm Stonepeak Partners LP.
Back in February last year, BP announced a strategic review of Castrol as part of plans to raise USD20 billion by the end of 2027 through disposals.
BP on Thursday said the 2027 cost reduction target equates to around 30% of its 2023 cost baseline.
The FTSE 100-listing added that the refinery sale will be free cash flow accretive and help improve the resilience of its refining portfolio, while allowing it to focus on core integrated businesses.
The Gelsenkirchen refinery primarily manufactures fuels for vehicles and aircraft, processing roughly 12 million tonnes of crude oil per year. The refinery also supplies feedstocks to the petrochemical industry in Germany and across Europe.
Gelsenkirchen operates two sites in Horst and Scholven in Germany, consisting of an integrated refining and petrochemical hub as well as the Bottrop tank farm.
To maintain BP's regional supply requirements, BP has agreed offtake arrangements covering ground fuels, aviation fuel and coke.
The deal is expected to be completed in the second half of 2026, subject to regulatory approvals.
Klesch Group is an independent refiner and employs more than 1,000 people in locations including the UK, Switzerland, Denmark and Germany. It has offices in London and Geneva.
BP Interim Chief Executive Carol Howle said: "With this transaction, we are strengthening our balance sheet, increasing our structural cost reduction target, and increasing the resilience of our focused refining portfolio. We will continue to take decisive action to reduce portfolio complexity - with a continued focus on growing cash flow and returns and delivering value for our shareholders."
Shares in BP were up 1.7% to 565.20 pence each in London on Thursday morning. The wider FTSE 100 index was down 1.6%. Brent crude traded at USD113.19 per barrel, up from USD108.21 at the time of the London equities close on Wednesday.
By Jeremy Cutler, Alliance News reporter
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