BP accelerates restructuring with $1.7B refinery sale amid rising oil prices
BP is speeding up its internal restructuring as oil prices climb. The company has announced a major sale of its German refinery while facing labour disputes in the US. Meanwhile, its stock performance has improved significantly this year.
The energy giant has agreed to sell its Gelsenkirchen refinery in Germany to the Klesch Group. The plant processes 12 million tons of crude annually and employs around 1,800 workers, who will transfer to the new owner. Analysts suggest the deal could remove up to $1.7 billion in liabilities from BP's books.
In the US, about 800 unionised workers at BP's Whiting refinery in Indiana remain locked out. Management, however, does not anticipate major disruptions to production. The dispute comes as global oil markets face pressure from blockades in the Strait of Hormuz, pushing Brent crude prices to roughly $112 per barrel.
BP has also raised its cost-cutting target for 2027, now aiming for $6.5 to $7.5 billion in structural savings. The company is pushing ahead with a $20 billion divestment plan by the same year, having already secured over $11 billion in sales. These moves are designed to strengthen its financial position and secure future cash flow.
HSBC recently upgraded BP's rating from 'Reduce' to 'Hold' and lifted its price target, citing the refinery sale as a key factor. Despite this, the broader analyst consensus stays cautious, with an average target of $38.28. BP's shares closed at €6.45 on Friday, marking a 27% rise since the start of the year.
The sale of the Gelsenkirchen refinery and ongoing cost reductions reflect BP's strategy to streamline operations. With oil prices high and geopolitical tensions affecting supply chains, the company is focusing on financial stability. The US government has already responded to market pressures by issuing a 60-day Jones Act waiver to ease fuel transport.
