Saudi Aramco Weighs Bid for BP’s Castrol Lubricant Assets

Saudi Aramco Considers Bid for BP’s Lubricant Assets

Saudi Aramco, the world’s largest energy company, is considering a potential offer for the lubricant assets being sold by BP, according to sources familiar with the matter.

The company is studying whether to bid for part or all of the business, which operates under the Castrol brand name. Aramco could look to combine the Castrol assets with its Valvoline lubricants unit, which it acquired in a $2.65 billion deal completed in 2023.

BP’s Strategic Review of Castrol Lubricants

As part of a major corporate revamp, BP is starting a strategic review of the Castrol lubricants business, which Bloomberg News previously reported could be worth around $10 billion.

Aramco’s Interest in Fast-Growing Markets

Aramco is particularly interested in Castrol’s operations in fast-growing markets like India, where its Mumbai-listed subsidiary Castrol India has a market value of about $2.5 billion. The company’s deliberations are still at an early stage, and it has not made a final decision on the structure of a potential bid or whether it will proceed. The Castrol assets are also attracting interest from other bidders, according to sources.

Aramco’s Acquisition Strategy

Aramco is looking to expand its reach in oil-consuming countries and is focusing on acquisitions that can help it achieve this goal. The company has a history of making deals for refining and chemical assets in Asia and sees China, India, and Southeast Asia as its big growth markets. Owning businesses like filling stations and lubricant manufacturers gives oil producers more sway along the energy value chain, while taking them deeper into markets where they sell their crude.

Recent Acquisitions

Aramco has made a string of deals for refining and chemical assets in China and bought a stake in a company in the Philippines last month that will give it access to the retail market. The company is also among bidders for Shell’s service stations in South Africa, according to Bloomberg News.

Conclusion

Saudi Aramco’s potential bid for BP’s lubricant assets is part of its broader strategy to expand its reach in oil-consuming countries. The company’s interest in Castrol’s operations in fast-growing markets like India highlights its focus on emerging markets and its desire to deepen its presence in these regions.

FAQs

Q: What is Saudi Aramco’s interest in BP’s lubricant assets?
A: Saudi Aramco is considering a potential offer for part or all of BP’s Castrol lubricants business, which operates under the Castrol brand name.

Q: Why is Aramco interested in Castrol’s operations in India?
A: Aramco is particularly interested in Castrol’s operations in fast-growing markets like India, where its Mumbai-listed subsidiary Castrol India has a market value of about $2.5 billion.

Q: What is the potential value of BP’s Castrol lubricants business?
A: The business is valued at around $10 billion, according to Bloomberg News reports.