• BP is actively negotiating with Stonepeak Partners for the sale of its Castrol lubricants unit after most other bidders withdrew.
  • The sale price is now expected to be between $6-8 billion, significantly below BP's initial $10 billion target.
  • The divestment is crucial for CEO Murray Auchincloss's strategy to refocus on oil and gas and meet $20 billion asset sale targets by 2027.

BP Plc is in active discussions with infrastructure-focused investor Stonepeak Partners regarding the potential sale of its Castrol lubricants business, according to people familiar with the matter, as the energy giant struggles to find buyers for one of its most recognizable assets.

The talks come after most initial bidders dropped out of the process, leaving Stonepeak and One Rock Capital Partners as the remaining serious suitors for a business that operates in over 150 countries. The diminished competition has driven down the expected sale value to between $6 billion and $8 billion, well below the $10 billion BP had initially targeted, the people said.

"The bidding pool has thinned considerably," said one person briefed on the negotiations, who asked not to be identified discussing private matters. "Stonepeak remains engaged, but there's a significant gap between what BP wants and what buyers are willing to pay given current market conditions."

The Castrol sale represents a critical test for Chief Executive Officer Murray Auchincloss, who took over earlier this year and is under pressure from shareholders including Elliott Investment Management to streamline operations and improve returns. The divestment is part of a broader $20 billion asset sale program BP committed to complete by the end of 2027.

Efforts to restructure its portfolio have hit several snags recently, with the Castrol process proving particularly challenging. The lubricants market faces uncertainty amid the global transition toward electric vehicles, which require different maintenance products than traditional combustion engines. At the same time, Castrol has been developing liquid cooling systems for artificial intelligence data centers, a potential growth area that hasn't yet translated into higher valuation multiples.

BP's incoming chairman Albert Manifold, set to replace Helge Lund, will inherit the challenging divestment program amid broader strategic questions about the company's direction. The energy major has been refocusing on oil and gas production while maintaining some transition businesses, a balancing act that has drawn scrutiny from both climate-focused investors and those primarily concerned with financial returns.

Spokespeople for BP and Stonepeak declined to comment. One Rock Capital Partners didn't respond to requests for comment.

Without a successful sale in the coming months, BP would face increased pressure to find alternative ways to meet its asset disposal targets. The company recently sold its US onshore wind business to LS Power and divested Dutch fuel retail and electric vehicle charging sites, but these smaller transactions barely make a dent in the $20 billion goal.

Market conditions for large asset sales have deteriorated across the energy sector as financing costs remain elevated and economic uncertainty persists. Rivals including Shell Plc and Exxon Mobil Corp have also been optimizing their portfolios, though they've generally found more receptive markets for their disposal targets.

Correction: An earlier version of this article misstated the timeline for BP's asset sale program. The company aims to complete $20 billion in divestments by end-2027, not 2025.