bp has agreed to sell its Gelsenkirchen refinery and associated businesses in Germany to Klesch Group, marking a key step in its strategy to streamline operations, strengthen its balance sheet, and focus on core integrated downstream activities.

 The deal supports bp’s goal of achieving $6.5–$7.5 billion in structural cost reductions by 2027, including around $1 billion in savings linked to the refinery’s operating expenses.

 This updated target represents roughly 30 per cent of bp’s 2023 cost base and reflects a continued increase from earlier projections.

The transaction is expected to be cash flow accretive and help lower bp’s refining portfolio breakeven. It includes the Gelsenkirchen refinery, Bottrop tank farm, DHC Solvent Chemie GmbH, logistics joint ventures, and related petrochemical and fuel marketing businesses.

The refinery processes around 12 million tonnes of crude oil annually, producing fuels and supplying feedstocks across Germany and Europe.

bp will maintain regional supply through offtake agreements covering fuels and other products. Around 1,800 employees are expected to transfer to the new owner. 

The deal remains subject to regulatory approvals and is anticipated to close in the second half of 2026.

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.”

Patrick Wendeler, head of country for Germany at bp, added: “We have a long history of operating successful assets and brands in Germany, and we are deeply grateful for the refinery’s decades of contribution to our business. We are confident that Klesch Group’s experience in refining makes them the right owner for Gelsenkirchen’s next chapter.” -OGN/TradeArabia News Service