Saudi Aramco is considering a potential acquisition of bp’s Castrol lubricant business, which could value the division at approximately $10bn (£7.77bn), reported Bloomberg.
BP has been contemplating various options for its Castrol division, including a potential sale, as part of a broader strategic review.
The valuation of the Castrol business is estimated at $6bn–8bn, as noted by investment banking firm Panmure Liberum.
Saudi Aramco is exploring whether to bid for part or all of the Castrol business, with the possibility of integrating Castrol with its Valvoline lubricants unit, which was acquired in 2023 in a $2.65bn (SR9.94bn) deal.
Aramco’s interest in Castrol is particularly focused on its presence in rapidly expanding markets such as India, where Castrol India has a market value of around $2.5bn.
Last week, bp disclosed its review of the Castrol business and its aim to achieve $20bn in divestments by 2027.
This divestment plan is central to CEO Murray Auchincloss’ strategy to reduce renewable energy investment and reinforce bp’s focus on oil and gas production to boost earnings.
Compared with competitors such as Shell and Exxon, bp has been lagging. Under the scrutiny of activist investor Elliott Investment Management, which has acquired a 5% stake in bp, the company is facing pressure to overhaul its strategy.
Elliott suggests that bp could unlock value and augment share buybacks by selling off its Castrol lubricants and service station network, as per a source who spoke to Reuters.
Aramco has not finalised its decision regarding the structure of a potential Castrol bid or whether it will proceed, with discussions still at a preliminary stage, as reported by Bloomberg.
