BP to sell German oil refinery as part of $20bn cost-cutting plan

BP has agreed to sell its giant German oil refinery site in Gelsenkirchen to the investment firm Klesch Group as part of the British oil company’s plan to sell off $20bn (£15bn) worth of assets and cut its costs.The value of the sale was not disclosed but BP said it would save the oil company about $1bn of underlying operating expenditure at the complex, which processes about 12m tonnes of crude oil every year, mainly as fuel for cars and aircraft.The sale has also enabled BP to raise its cost-cutting target to between $6.5bn and $7.5bn by 2027, or almost a third of its cost baseline in 2023. It will also move forward the embattled oil company’s divestment programme, which has now reached more than $11bn of its $20bn target by the same year.BP has been on a mission to shed assets and reduce the complexity of the 117-year-old company after a leadership overhaul that followed a failed attempt to become a green energy business, which dampened its market value.The company is also planning a full return to the UK capital by moving its global headquarters to a new development on London’s South Bank. Although its leadership is based at the official global HQ on St James’s Square in central London, many of its technical teams are based in Sunbury, Surrey.Once the move is complete, in early 2028, the company will be based at the 17,800 sq metre (192,000 sq ft) Timber Square office scheme on the South Bank, just a mile away from the global HQ of its European oil rival Shell.The new BP chief executive, Meg O’Neill, will join the company from Australia’s Woodside Energy in April as the first external hire to step into the company’s top job and the first woman to helm a leading listed oil company.O’Neill’s surprise appointment was made late last year, weeks after BP appointed Albert Manifold to chair its board. Manifold replaced Helge Lund, who presided over the oil company’s failed attempt to adopt a green energy agenda.The company’s decision to cut spending on fossil fuels in favour of large bets on offshore windfarms was blamed for BP’s struggle to keep pace with industry rivals, including Shell, which were better able to profit from the energy crisis triggered by Russia’s full-scale invasion of Ukraine in 2022.As BP’s third chief executive in under five years, O’Neill is expected to face pressure from disgruntled shareholders, including the New York activist hedge fund Elliott Management, to improve the company’s fortunes as well as renewed calls from green groups to end their contribution to the climate crisis.O’Neill is expected to take home at least £11.7m this year after BP agreed to compensate her for the share awards she was in line to receive over the next five years in her previous role.The payday is more than double the £5.3m pay packet earned by Murray Auchincloss, BP’s former chief financial officer who left the role of chief executive late last year after less than two years in the job.BP said Gelsenkirchen’s 1,800 employees at the integrated refinery complex, along with those supporting logistics and sales infrastructure, would join Klesch once the deal completes in the second half of this year.