BP to Sell Lubricants Business, Abandon Output Cuts
BP Plc plans to divest its lubricants unit and halt plans to reduce oil and gas production, marking a strategic shift away from renewable energy. The move comes amid pressure from activist investor Elliott Investment Management.
BP's CEO Murray Auchincloss unveiled a "fundamental reset" strategy, promising to address concerns over investor returns after significant clean energy investments. Elliott, known for its aggressive tactics, will evaluate BP's plan and may push for management changes if dissatisfied.
The sale of the lubricants unit, operating under the Castrol brand, could fetch around $10 billion. Proceeds would strengthen BP's balance sheet and boost returns. The energy giant will also scrap plans to cut oil and gas production, scaling back its renewable energy targets.
BP's previous CEO Bernard Looney had pledged a 25% output reduction by 2030, but the company now acknowledges the continued demand for fossil fuels. Auchincloss has already spun off BP's offshore wind business and halted certain biofuels and hydrogen projects.
Other divestment options include the solar business Lightsource BP and biogas producer Archaea. The sale of lubricants assets follows Valvoline Inc.'s 2022 sale to Saudi Aramco for $2.65 billion.
BP has also reached an agreement with Iraq to redevelop the Kirkuk fields, potentially boosting its oil and gas production. Bloomberg first reported Elliott's stake in BP, while Reuters had earlier disclosed plans to abandon output cuts and scale back renewable energy targets.