BP completes sale of Gelsenkirchen refinery as overhaul continues

By Stephanie Kelly

Aug 3 (Reuters) - BP has completed the sale of its Gelsenkirchen refinery to investment firm Klesch Group, expecting about a $1 billion reduction in underlying operating expenditure as the oil major simplifies its operations.

The London-listed company has made sweeping changes over the past year to boost profitability as it pursues a strategy reset after an ill-fated foray into renewables. BP said last week that it wants to sell its North Sea assets.

The value of the Gelsenkirchen deal was not disclosed, but BP said the transaction adds to free cash flow and transfers associated assets and liabilities to Klesch.

Part of BP's $20 billion divestment plan to cut debt and boost returns, the sale allowed BP to raise the company's structural cost reduction target to between $6.5 billion and $7.5 billion by 2027.

The refinery processes about 12 million metric tons of crude oil per year. 

Barclays analyst Lydia Rainforth previously estimated the sale would help BP to remove $1.3 billion to $​1.7 billion of liabilities from its books.

The deal helps the company to concentrate capital where it can be most competitive, said Richard Harding, BP's interim executive vice president of downstream. BP's refining portfolio now comprises five refineries — Cherry Point and Whiting in the U.S. and Castellon, Lingen and Rotterdam in Europe. 

(Reporting by Simone Lobo in Bengaluru and Stephanie Kelly in LondonEditing by Mrigank Dhaniwala and David Goodman)