BP offloads its German refinery as it raises its cost-cutting target to $7.5 billion by 2027
BP PLC (LSE:BP.), the British oil and gas major, has agreed to sell its Gelsenkirchen refinery and related businesses to Klesch Group, an independent European refiner, in a deal that lifts the company's structural cost reduction target by around $1 billion.
The sale pushes the oil major's cost-cutting ambitions to between $6.5 billion and $7.5 billion by 2027, equivalent to roughly 30% of its 2023 cost baseline.
This is the second time BP has raised the target, having initially set a $4 to $5 billion goal in February 2025 before increasing it to $5.5 to $6.5 billion in February 2026 following a strategic review of its Castrol lubricants business.
The Gelsenkirchen site processes roughly 12 million tonnes of crude oil per year, producing vehicle and aviation fuels as well as petrochemical feedstocks for markets across Germany and Europe.
The deal includes the Gelsenkirchen refinery, the Bottrop tank farm, chemical subsidiary DHC Solvent Chemie, interests in logistics joint ventures and marketing operations for petrochemicals and unbranded business-to-business fuels.
Around 1,800 workers at the integrated refinery complex are expected to transfer to Klesch Group on completion.
To protect its regional supply needs, BP has agreed offtake arrangements covering ground fuels, aviation fuel and coke.
Carol Howle, interim chief executive of the company, said the transaction would strengthen the company's balance sheet, increase its cost reduction target and improve the resilience of its retained refining portfolio.
Patrick Wendeler, BP's head of country for Germany, said Klesch Group's experience in refining made it "the right owner for Gelsenkirchen's next chapter."
In the stock exchange update, the group said the deal is free cash flow accretive based on historical performance and will lower the cash breakeven for its remaining refinery operations.
The transaction is subject to regulatory and governmental approvals and is expected to close in the second half of 2026.