The BP will look at its lubricant unit, which operates under the Castrol brand and can potentially worth about $ 10 billion. (Waldo swiegers/Bloomberg)
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BP PLC is set to announce a possible sale of its lubricant business and abandon plans to shorten oil and gas production while starting a shift away from renewable energy between pressure from activist Elliott investment management, according to people of people familiar with the issue.
In a significant strategy presentation, CEO Murray Auchincloss has promised to “radically” restore the oil size in the war, after five years of heavy investment in pure energy to leave investors dissatisfied with the company’s returns. The other movements from Elliott, which is known for its aggressive tactics, will depend on whether CEO comes out with a bold enough plan.
If Elliott is dissatisfied with BP movements, the defense fund may require management changes, people said. Mayor Helge Lund, who is known as one of the leading supporters of the company’s criticized net zero strategy, can be under special pressure.
The BP will look at its lubricant unit, which operates under the Castrol brand and may potentially be worth about $ 10 billion, people said, demanding that they not be identified as the issue is private. Income from such a sale can help to strengthen the company’s balance sheet, which is weaker than its peers, and the return of strengthening investors.
CEO MURRAY AUCHINCLOSS is under pressure to determine a new vision for BP after just over a year at work. (Auchincloss from BP)
The energy giant plan to reduce oil and gas production will also be removed, while objectives to increase the production of renewable energy will escalate, people said. According to the previous CEO Bernard Looney, BP made a failed bet that oil consumption had already reached its peak and promised a decrease in 25% by 2030, compared to 2019 levels.
A BP spokesman refused to comment. A representative for Elliott could not comment immediately.
Auchincloss is under pressure to determine a new vision for BP after just over a year at work, changing the most anticipated strategy for a large oil in a few years. Elliott, who has built a share of about 3.7 billion pounds (4.7 billion dollars), is seeking drastic cost reductions and shifts to support its future as an independent company, reported Bloomberg News at the beginning of the month.
Auchincloss has already made some decisions that show how things will change, such as the rotation of the BP offshore wind and stopping some biofuels and hydrogen projects. The company is likely to look at other options for a renewable sale or spinoff, including solar business Lightsource BP or American biogas manufacturer Archaea, which earned it for about $ 4 billion in 2022, people said.
There is a precedent for the sale of lubricant assets. US Valvoline Inc. It agreed in 2022 to sell its unit that produces lubricants and chemicals for vehicles in Saudi Aramco for $ 2.65 billion.
Earlier on February 25, BP ended the terms of an agreement that could increase its production of oil and gas and see it return to its Middle East roots. The company agreed with the Iraqi government to redevelop the Kirkuk fields, which have suffered from years of underestimation and neglect, potentially unlocking about 3 billion barrels of equivalent oil.
Bloomberg was the first to discover earlier this month that Elliott had built an action on the PB, and last week the firm was considering a lubricant sale. Reuters reported last year that the BP would abandon its promise to reduce oil and gas production, and on February 24, which would reduce its goals for growth in renewable energy generation.
Written by Dinesh Nair, Aaron Kirchfeld and Mitchell Ferman