British oil major BP sells 65% of Castrol to Stonepeak for $6 billion to refocus on oil

British oil major BP has agreed to sell a 65% stake in its motor oil division Castrol for $6 billion (£4.4 billion) to New York-based investment firm Stonepeak, valuing Castrol at $10.1 billion (£7.5 billion), according to a statement released Wednesday.

The London-based oil major will retain a 35% stake, giving it continued exposure to Castrol’s growth while freeing cash to reduce debt and concentrate on its core crude oil and gas business.

Castrol, which produces lubricants for cars, motorcycles, and industrial vehicles, has been part of BP since 2000. The sale is part of BP’s broader $20 billion (£15 billion) divestment program, announced in February, aimed at simplifying its portfolio, strengthening its balance sheet, and returning focus to oil and gas amid investor pressure. Following this deal and previous sales, BP says it is now more than halfway toward meeting that divestment target.

Joint venture

Interim CEO Carol Howle described the transaction as a “very good outcome for all stakeholders,” noting it reduces complexity, focuses the downstream segment, and accelerates BP’s reset strategy. Anthony Borreca, co-head of energy at Stonepeak, highlighted Castrol’s “126-year heritage” and its importance in global vehicle and industrial operations.

The deal includes pre-payment of future dividends totaling around $800 million (£590 million) on BP’s retained stake and other adjustments. After completion, expected by the end of 2026 pending regulatory approval, a joint venture will be formed with 65% Stonepeak and 35% BP ownership. BP retains optionality to sell its remaining stake after a two-year lock-up period.

Since its public beta launch, Castrol has demonstrated strong growth, with nine consecutive quarters of year-on-year earnings improvement. Non-controlling interests, including stakes in India, Vietnam, Saudi Arabia, and Thailand, have averaged $100 million per year in net income since 2019.

Divestment strategy

The sale follows a series of recent divestments, including BP’s US onshore wind energy business and Dutch mobility and convenience operations. The proceeds are earmarked to reduce BP’s net debt of $26.1 billion (£19.3 billion) as of Q3 2025, moving the company closer to its target of $14-18 billion (£10.3-13.3 billion) by 2027.

Shares in BP initially rose on the announcement, reflecting investor optimism that the company is streamlining its operations, focusing on high-value assets, and positioning itself for long-term profitability in oil and gas.

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Nathaniel Alexander Abaño

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