British energy giant BP has agreed to sell a 65% stake in its iconic lubricants business, Castrol, to U.S. investment firm Stonepeak for approximately $6 billion, valuing the unit at about $10.1 billion in enterprise terms, according to multiple reports.
The deal is a cornerstone of BP’s broader strategy to divest $20 billion of assets by the end of 2027 as part of a sweeping corporate reset aimed at simplifying operations, reducing debt, and refocusing on core energy businesses.
What the Deal Involves
Under the terms announced on December 24, 2025, Stonepeak will acquire a controlling 65% shareholding in Castrol, with BP retaining the remaining 35% through a new joint venture. BP retains the option to sell its minority stake after a two‑year lock‑up period.
The transaction is expected to close by the end of 2026, subject to regulatory approvals. In addition to the $6 billion in net proceeds expected to go to BP, the sale includes approximately $800 million in accelerated dividend payments tied to the remaining stake.
BP will also allocate two board seats in the new joint venture, maintaining strategic influence over the business as it transitions.
A Reset Strategy Driven by Financial Priorities
The Castrol sale marks the largest asset divestiture in BP’s reset plan to date. Interim BP CEO Carol Howle said the deal “significantly strengthens BP’s balance sheet,” while enabling the company to “reduce complexity” and “accelerate delivery” of its strategic priorities.
BP has stated that the proceeds will be used principally to reduce its net debt, which stood at around $26.1 billion at the end of the third quarter of 2025, moving toward a target range of $14–18 billion by the end of 2027.
Since initiating its divestment programme, BP has already completed or announced over $11 billion in asset sales, with Castrol representing a major milestone in that campaign.
BP’s own stock saw modest gains as investors digested the announcement, reflecting a broader assessment of improved financial discipline and clearer strategic focus.
The sale also follows renewed leadership changes at BP. The company recently appointed Meg O’Neill, the chief executive of Woodside Energy, as its next CEO, set to begin in April 2026, succeeding Murray Auchincloss. Analysts view this leadership shift as part of an effort to stabilise performance after years of underperformance relative to European peers.
The Strategic Logic Behind the Divestment
Castrol, known globally for engine oils, industrial lubricants, and specialty fluids, remains a strong and profitable business. Nevertheless, BP’s decision to sell the majority stake reflects a strategic pivot.
Investors and analysts suggest the move aims to free up capital to bolster BP’s core oil and gas operations, where it sees more predictable cash flows and stronger investor returns, particularly after criticism from activist shareholders over the company’s past renewables strategy.
By retaining a minority stake, BP can still participate in Castrol’s future growth while using the immediate proceeds to strengthen its balance sheet. The joint venture structure also allows BP to reduce operational complexity and focus on its broader downstream and upstream integration.
What Happens Next?
With regulatory clearances pending, the Castrol sale is expected to be completed by late 2026. BP’s divestment plan, combined with leadership changes and a clearer strategic direction, suggests the oil major is aiming for a leaner, more profitable structure capable of delivering shareholder value in a challenging energy market.
The success of this approach will be watched closely by investors, particularly as BP balances debt reduction with the need to remain competitive amid global shifts in energy demand and price volatility.
