BP Completes Sale of German Refinery as Oil Major Advances Cost-Cutting Strategy

BY COMFORT OGBONNA

BP has completed the sale of its Gelsenkirchen refinery in Germany to investment firm Klesch Group, marking another step in the energy company’s efforts to simplify its operations, reduce costs and improve financial performance.

The transaction is expected to reduce BP’s underlying operating expenses by about $1 billion as the company continues a broad restructuring program aimed at strengthening profitability and increasing returns for shareholders. Financial details of the deal were not disclosed, but BP said the sale will improve free cash flow and transfer related assets and liabilities to Klesch.

The refinery sale is part of BP’s broader plan to divest about $20 billion in assets, reduce debt and focus investment on areas where the company believes it can achieve stronger returns. The company said the move has allowed it to increase its long-term structural cost reduction target to between $6.5 billion and $7.5 billion by 2027.

The Gelsenkirchen facility, one of Germany’s major refining sites, has the capacity to process approximately 12 million metric tons of crude oil annually. The sale represents a significant shift in BP’s downstream portfolio as the company works to streamline its global refining operations.

BP has undergone major strategic changes over the past year after reassessing its previous expansion into renewable energy. The company has shifted its focus back toward oil and gas investments while prioritizing profitability, capital discipline and shareholder returns.

As part of that strategy, BP has also indicated plans to sell its North Sea assets as it continues reviewing its global portfolio.

Analysts had previously estimated that the Gelsenkirchen transaction could remove between $1.3 billion and $1.7 billion in liabilities from BP’s balance sheet, further supporting the company’s efforts to strengthen its financial position.

Richard Harding, BP’s interim executive vice president for downstream operations, said the sale would allow the company to direct capital toward areas where it can compete more effectively.

Following the transaction, BP’s refining portfolio consists of five major facilities: Cherry Point and Whiting in the United States, along with Castellón, Lingen and Rotterdam in Europe.

The company said the continued reshaping of its business is designed to create a more focused and efficient organization capable of delivering stronger financial results in a changing energy market.