BP has announced the sale of a refinery in Gelsenkirchen, Germany, as part of an effort to trim down costs across the group.

The oil giant said the transaction with European refiner, Klesch Group, would simplify its portfolio and strengthen the balance sheet.

BP is targeting between $6.5bn and $7.5bn in structural cost reductions by 2027, which reflects the expected savings of around $1bn of underlying operating expenditure associated with the Gelsenkirchen site.

The FTSE 100 group’s 2027 cost reduction target now equates to around 30% of BP’s 2023 cost baseline.

BP stated that its latest deal is “free cash flow accretive” based on historical performance and contributes to lowering the company’s cash breakeven for its retained refining portfolio.

Interim CEO at BP, Carol Howle, 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.”

Head of country for Germany at BP, Patrick Wendeler, 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.”

BP is expecting the transaction to close in H2 2026, subject to regulatory and governmental approvals.

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