BP said on Thursday it would sell its German oil refinery site in Gelsenkirchen to investment firm Klesch Group for an undisclosed sum and raised its cost reduction target, in the latest move to simplify its portfolio and shore up its balance sheet.
The transaction forms part of the British oil major’s $20 billion divestment plan aimed at cutting debt and boosting returns and is expected to save BP around $1 billion of underlying operating expenditure associated with Gelsenkirchen.
BP declined to provide a value of the deal.
The sale of the refinery, which processes about 12 million metric tons of crude oil annually mainly as fuel for cars and aircraft, allowed BP to raise its structural cost reduction target to between $6.5 billion and $7.5 billion by 2027.
Shedding costs
The 2027 cost reduction target equates to around 30% of BP’s 2023 cost baseline, the company said.
BP in February had lifted its cost savings target to $5.5 billion to $6.5 billion after the sale of its Castrol business.
The deal will add to the group’s free cash flow based on historical performance and will help lower BP’s cash breakeven for its remaining refining portfolio, the company said.
About 1,800 employees at the integrated refinery complex, along with those supporting logistics and sales infrastructure, are expected to join Klesch upon completion of the deal in the second half of 2026.
BP’s divestment programme has now reached over $11 billion of its targeted $20 billion by 2027, as the company continues to shed assets and reduce complexity under the leadership of interim CEO Carol Howle.
BP’s new chief executive, Meg O’Neill, will take over in April.