BP to Sell Gas Pipeline Stake to Apollo Funds for $1 Billion

(Bloomberg) -- BP Plc said Apollo-managed funds will purchase a 25% non-controlling stake in BP Pipelines — known as BP TANAP — for about $1 billion, marking the British energy giant’s first divestment under its turnaround plan.

TANAP holds BP’s 12% interest in the Trans-Anatolian natural gas pipeline, part of the Southern Gas Corridor pipeline system that carries fuel from the Shah Deniz field in the Azerbaijan section of the Caspian Sea through Turkey to markets in Europe, including Italy and Greece. 

The deal is set to close in the second quarter, subject to regulatory and TANAP shareholder approvals. Proceeds from the transaction will contribute to BP’s new $20 billion divestment program, the company said in a statement Friday. 

BP has come under pressure from investors, including the aggressive activist Elliott Investment Management, to flip its trajectory. After the company’s value plunged during Chief Executive Officer Murray Auchincloss’s first year in the role, he announced in February that BP would return to focusing on fossil fuels after the firm previously tried moving away from hydrocarbons. 

Part of the strategic reset includes $20 billion worth of divestments by the end of 2027 to improve cash flows. 

“This unlocks capital from our global portfolio while retaining our role in this strategic asset for bringing Azerbaijan gas to Europe,” BP Executive Vice President William Lin said in a statement.

Significant progress toward the divestment goal could be made with the sale of the Castrol lubricants business, which BP is reviewing for disposal. Bloomberg previously reported Castrol could be worth as much as $10 billion, and Saudi Aramco is considering a potential offer.

BP’s revival plan has been met with a lukewarm response from investors, with shares falling on the day of the announcement. Auchincloss has said the strategy unveil was a step in the turnaround and that now the company needs to execute.

The plan, however, fell short of Elliott’s expectations as it sees a lack of urgency and ambition, Bloomberg reported.

(Updates with additional details from the fourth paragraph.)

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