US private equity firm Stonepeak is set to acquire a 65% stake in BP’s Castrol lubricants business for approximately US$6 billion, as the British oil major advances its $20 billion divestment strategy aimed at cutting debt and improving returns.
Reuters reported that the deal values Castrol at US$10.1 billion, with BP retaining a 35% stake in a joint venture it can sell after a two-year lock-in period.
BP plans to use the proceeds to reduce net debt from US$26 billion to a target range of US$14-US$18 billion by the end of 2027. The transaction also includes US$800 million for accelerated dividend payments and is expected to close by end-2026.
The sale follows BP’s strategic review of its century-old lubricants unit, reflecting a renewed focus on its core oil and gas business after years of underperformance in renewables. The Canada Pension Plan Investment Board will join Stonepeak, investing up to US$1.05 billion for an indirect stake in Castrol.
BP shares initially rose over 1% following the announcement before stabilising, highlighting investor support for the company’s portfolio simplification under incoming CEO Meg O’Neill and new Chair Albert Manifold.
With this deal, BP’s total announced and completed divestments now amount to around US$11 billion, as the company continues its push to streamline operations and boost shareholder returns.
