BP Plc is set to announce the sale of its lubricants business, Castrol, as part of a strategy shift away from renewable energy. The move comes under pressure from activist investor Elliott Investment Management, which is demanding drastic cost cuts and divestments.
CEO Murray Auchincloss has promised to “fundamentally reset” the company’s struggling oil major operations after five years of heavy investment in clean energy left investors unhappy with returns. BP will look to divest its Castrol unit, potentially worth $10 billion, to strengthen its balance sheet and bolster investor returns.
The company is also scrapping plans to cut oil and gas production, which was a key component of its previous CEO Bernard Looney’s strategy. Instead, targets for renewable power generation will be scaled back. BP has already taken some decisions that indicate the direction of this shift, such as spinning off its offshore wind business and stopping biofuels and hydrogen projects.
Elliott Investment Management has built up a stake worth about $4.7 billion in BP and is demanding drastic changes to support its future as a standalone company. The sale of Castrol lubricants could help to satisfy these demands, with proceeds potentially helping to bolster the company’s balance sheet.
Source: https://www.ttnews.com/articles/bp-sale-castrol-lubricants