BP has reached an agreement to sell its Gelsenkirchen refinery and related businesses to Klesch Group, an independent European refiner.
The transaction represents a significant milestone in BP’s acceleration of its strategy, including simplifying the portfolio, strengthening the balance sheet, and focusing the downstream on its leading integrated businesses.
BP is now targeting US$6.5 to US$7.5 billion of structural cost reductions by 2027, reflecting the expected savings of around US$1 billion of underlying operating expenditure associated with Gelsenkirchen. The 2027 cost reduction target now equates to around 30% of BP's 2023 cost baseline. This marks the second time BP has increased its target, having outlined US$4 to US$5 billion of savings in February 2025, and increased this in February 2026 to US$5.5 to US$6.5 billion reflecting the outcome of the strategic review of Castrol.
The transaction strengthens BP’s balance sheet, is free cash flow accretive based on historical performance and contributes to lowering BP’s cash breakeven for its retained refining portfolio. In addition to the transfer of liabilities, transaction terms and associated proceeds are subject to customary closing adjustments, including for the value of inventory at time of completion.
Carol Howle, interim CEO at BP, said: “With this transaction, we are strengthening our balance sheet, increasing our structural cost reduction target, and increasing the resilience of our focused refining portfolio. 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.”