BP Sells US Pipeline Assets in Major £12 Billion Debt Reduction Drive

BP has agreed to divest minority stakes in key onshore oil and gas pipeline assets in the United States to investment firm Sixth Street. The deal, valued at £1.2 billion, forms a significant part of BP’s £16 billion divestment programme set to reduce the group’s debt burden. These pipeline assets operate in the Permian and Eagle Ford basins in Texas, both considered strategic hubs for North American oil and gas production.

BPX Energy, BP’s North American oil and gas subsidiary, will retain operational control of all the assets. The company will continue to hold a 51 per cent share in the Permian pipelines and a 25 per cent stake in Eagle Ford. These assets enable the connection of wells to third party pipeline systems for distribution to customers.

The move comes as BP faces mounting pressure from shareholders following an unsuccessful venture into renewables, which had a negative effect on profitability. The current divestment aligns with efforts to rebalance the company’s portfolio and strengthen its balance sheet. UBS analyst Josh Stone described the transaction as “a small positive” expected to lower BP’s leverage ratio by around one per cent and add between £80 million and £160 million to net income.

Recent trading saw shares in BP rise by 1.2 per cent, closing at 447.5p. Despite a pledge made in 2020 to transition towards greener energy and reduce oil and gas output by 40 per cent, this target has since been downgraded by chief executive Murray Auchincloss in favour of growing BP’s production capabilities.

The deal comes amid a broader environment of fluctuating oil prices. Brent crude, the global benchmark, recently averaged $69 per barrel in the third quarter, down from over $80 in the same period last year. Both BP and sector peer Shell are guiding their financial forecasts on an assumed Brent price of $70 per barrel.

BP’s strategic rethink includes the earlier sale of American onshore wind farms and a recently shelved offshore wind project in the US, citing political and regulatory challenges. The company’s renewed focus on its core hydrocarbon assets suggests a recalibrated approach designed to reassure investors and adapt to changing market realities.