BP Sells Majority Stake in Castrol to Stonepeak, Signals Strategic Reset as Castrol India Shares Surge
BP Plc has agreed to sell a 65 percent stake in its global lubricants business Castrol to investment firm Stonepeak in a $6 billion transaction, marking one of the energy major’s largest divestments in recent years. The deal, which values Castrol at $10.1 billion including debt, triggered a sharp rally in Castrol India shares, which climbed nearly 8 percent in early trade following the announcement.
The transaction is a key part of BP’s broader strategy to strengthen its balance sheet, reduce leverage, and sharpen focus on its core oil and gas operations after years of underperformance and rising pressure from activist investors.
Deal Structure Reflects BP’s Push to Reduce Debt and Retain Strategic Exposure
Under the terms of the agreement, BP will retain a minority interest in Castrol through a newly incorporated joint venture, ensuring continued exposure to the lubricants business while ceding operational control to Stonepeak.
BP said the entire net proceeds from the sale will be used to reduce net debt, aligning with its stated target of bringing debt down to $14–18 billion by the end of 2027. As of the end of the third quarter of 2025, BP’s net debt stood at $26.1 billion, highlighting the urgency behind the divestment drive.
“The transaction allows us to realise value for our shareholders, generating significant proceeds while continuing to benefit from Castrol’s strong growth momentum,” said Carol Howle, interim CEO of BP.
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Castrol India Emerges as Key Value Driver in Global Portfolio
A significant portion of Castrol’s value lies in its joint venture interests, particularly in India. As of September-end, Castrol held a 51 percent stake in Castrol India, making the Indian listed entity one of the most material components of the global lubricants business.
BP disclosed that the transaction includes minority interests across multiple markets, including:
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India – 49 percent
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Vietnam – 35 percent
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Saudi Arabia – 50 percent
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Thailand – 40 percent
According to BP, the implied total equity value of Castrol is about $8 billion after adjusting for joint venture minority interests of $1.8 billion and other debt-like obligations of roughly $0.3 billion.
The strong reaction in Castrol India shares reflects investor confidence that the transaction could unlock value while providing strategic continuity through BP’s retained interest.
Stonepeak Brings Long-Term Capital, CPPIB Joins as Co-Investor
Stonepeak, a global alternative investment firm with a focus on infrastructure and real assets, will lead the acquisition. Canada’s Canada Pension Plan Investment Board (CPPIB) will invest up to $1.05 billion as part of the deal, adding further credibility and long-term capital support.
BP will appoint two board members to the joint venture after completion, ensuring governance oversight and alignment of interests between partners.
For Stonepeak, the acquisition represents a bet on stable cash flows, strong brand equity, and growing demand for lubricants in emerging markets such as India and Southeast Asia.
Divestment Marks Major Milestone in BP’s $20 Billion Asset Sale Plan
The Castrol transaction accounts for a substantial portion of BP’s planned $20 billion asset divestment programme by 2027. The company initiated the sale process in February 2025 as part of a strategic reset announced by then CEO Murray Auchincloss.
That reset focused on:
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Reprioritising oil and gas investments
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Cutting costs and operational complexity
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Accelerating debt reduction
However, activist investor Elliott Investment Management criticised the initial plan for lacking urgency, pushing BP to move faster and deeper with asset sales.
“With this transaction, we have now completed or announced over half of our targeted $20 billion divestment programme,” Howle said.
Strategic Implications for BP and Castrol India Investors
For BP, the sale represents a shift toward a more focused portfolio and improved financial flexibility. For Castrol India shareholders, the transaction has raised expectations of:
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Continued operational stability
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Stronger capital discipline
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Potential long-term strategic support under a new ownership structure
The market response suggests investors view the deal as value-accretive rather than disruptive.
Key takeaways for investors:
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BP strengthens balance sheet and reduces leverage risk
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Castrol India remains a critical growth asset
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Long-term capital from Stonepeak and CPPIB supports stability
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Minority stake ensures BP retains upside participation
What Lies Ahead as BP Accelerates Its Reset Strategy
BP’s leadership emphasised that the Castrol sale is not an endpoint but part of a broader transformation aimed at restoring investor confidence.
“The sale marks an important milestone in the ongoing delivery of our reset strategy,” Howle said. “We are reducing complexity, focusing the downstream on our leading integrated businesses, and accelerating delivery of our plan.”
As BP continues to rebalance its portfolio and reduce debt, markets will closely watch whether the strategy translates into improved returns, especially at a time when global energy companies face pressure to balance profitability with transition goals.
