BP has agreed to sell its Gelsenkirchen refinery and related businesses to Klesch Group, an independent European refiner, in a deal that has enabled the oil major to increase its cost-reduction target by around $1 billion.
The disposal is the latest step in BP’s drive to simplify its portfolio and sharpen its downstream focus amid activist shareholder pressure to reduce its cost base.
The company now expects to deliver $6.5 to $7.5 billion of structural cost savings by 2027, equivalent to roughly 30 per cent of its 2023 cost base.
It is the second time BP has raised the target. The original range of $4 to $5 billion was set in February 2025, then bumped to $5.5 to $6.5 billion a year later following a strategic review of its Castrol lubricants business.
BP said the transaction is free-cash-flow accretive based on historical performance and will lower the cash breakeven for its remaining refining operations.
“With this transaction, we are strengthening our balance sheet, increasing our structural cost reduction target, and increasing the resilience of our focused refining portfolio,” said Carol Howle, interim CEO of BP.
“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.”