^{Photo: Bloomberg.com}

BP has agreed to sell a 65% stake in its global lubricants business, Castrol, to U.S.-based investment firm Stonepeak for $6 billion. The transaction values Castrol at approximately $10.1 billion, marking one of BP’s most significant portfolio moves in recent years. The sale forms a central part of BP’s broader plan to divest $20 billion in assets by the end of 2027 and rebalance its business around higher-return segments.

Castrol, one of the most recognized lubricant brands worldwide, operates in more than 150 countries and serves automotive, industrial, and marine customers. Despite its strong cash generation and brand equity, BP has chosen to partially exit the business to simplify operations and strengthen its balance sheet.

Why BP Is Selling
The Castrol sale comes amid a wider strategic reset at BP, which includes scaling back elements of its renewable energy ambitions and reallocating capital toward oil and gas exploration, production, and downstream integration. Management has indicated that reducing complexity and focusing on core competencies are critical to restoring competitiveness and shareholder confidence.

BP stated that proceeds from the deal will be used to reinforce the balance sheet, support capital discipline, and fund priority investments. With this transaction, BP has now completed or announced more than half of its targeted $20 billion divestment program.

Who Wanted Castrol
Interest in Castrol was strong. Several global energy majors and financial investors were reportedly exploring bids earlier this year, including Saudi Aramco, India’s Reliance Industries, and private equity firms such as Apollo Global Management and Lone Star Funds. Stonepeak ultimately emerged as the preferred partner, attracted by Castrol’s stable cash flows, premium margins, and global distribution network.

Under the agreement, BP retains a 35% minority stake and has the option to sell the remainder after a two-year lock-up period, giving the company flexibility to fully exit in the future if market conditions are favorable.

Leadership Change and Strategic Direction
The divestment follows closely on the heels of a major leadership transition. BP recently announced the appointment of Meg O’Neill as chief executive, effective April 1, making her the company’s fourth CEO in six years. She replaces Murray Auchincloss, whose tenure lasted less than two years.

Investors and analysts see the CEO change as a potential turning point. BP has lagged peers in recent years, reporting lower profits in both 2023 and 2024 and struggling to articulate a consistent long-term strategy. Market participants expect further asset sales as the new leadership team works to streamline the business and improve returns.

Market Performance and Investor Response
BP’s stock has shown tentative signs of recovery. Shares were modestly higher following news of the Castrol transaction and are up around 9% year to date, after falling nearly 16% in 2024. The rebound has been supported by leadership changes, cost-cutting initiatives, and several recent oil and gas discoveries that have improved production outlooks.

While challenges remain, the Castrol sale is widely viewed as a decisive step toward refocusing BP’s portfolio, improving capital efficiency, and restoring investor confidence after a prolonged period of underperformance.

What Comes Next
With more divestments expected, BP is signaling a clearer commitment to its traditional strengths. The Castrol deal not only unlocks significant value but also underscores a broader industry trend among major energy companies: prioritizing profitability, balance sheet strength, and operational simplicity over sprawling diversification.