Shares of the Indian arm of lubricant maker Castrol, a unit of BP, were buzzing on Thursday amid reports that Saudi Arabia’s state-owned oil giant Aramco is considering taking ownership of the brand.
Castrol India scrips at ₹245.85 were up 10.59 per cent at the Bombay Stock Exchange on Thursday and the stock was among the top five gainers during the day’s trade.
Castrol is among the top three brands in lubricants globally and is a market leader in India. It has three manufacturing plants in India, including one in Bengal.
According to a Reuters report, Saudi Aramco is in the early stages of considering a potential bid for BP’s lubricant business Castrol.
Last month BP informed investors that it is carrying out a strategic review of its Castrol business with the intention of accelerating the next phase of value delivery for the globally well-known brand. The strategic review of Castrol will consider all options with a focus on value creation, BP had said.
Market sources estimate Castrol’s valuation at around $10 billion. BP and Aramco have not made any official comment.
BP’s CEO Murray Auchincloss had informed investors in February that the London-based oil and gas major plans to undertake a massive $20-billion divestment programme that includes the strategic review of Castrol and onshore renewable energy firm Lightsource bp. The divestment will allow BP to focus on its core business of oil and gas to enhance its earnings.
“Proceeds from both of these potential transactions are included in the $20 billion divestment programme. And the proceeds from these transactions will be dedicated to strengthening our balance sheet, contributing to lowering net debt to a range of $14-18 billion by 2027,” Auchincloss said.
“Having turned around performance at Castrol, and being a less integrated business, we will be looking at options to accelerate Castrol’s next phase of value delivery. Alongside this, we are continuing with our aim to bring a strategic partner into Lightsource bp to help further grow and optimise the platform in a capital-light way,” he had informed analysts.
As of the fourth quarter of 2024, BP’s net debt was $23 billion.
Reuters had earlier reported that BP has underperformed compared with its peers like Shell and Exxon and has come under investor pressure to change strategy.
If the deal goes through, Aramco could look to combine Castrol assets with its Valvoline lubricants unit, which it bought in a $2.65-billion deal that was completed in 2023.
Aramco has been on a shopping spree and is expanding its retail presence in high-value markets. In 2024, it acquired a 100 per cent stake in Chile’s Esmax and a 40 per cent stake in Gas and Oil Pakistan.
Last year, Aramco announced that it is searching for additional refining and chemicals acquisitions in India, China, and Southeast Asia, which it identifies as significant growth markets.
Saudi Aramco’s venture capital (VC) division — Prosperity7 Ventures — was also reportedly in the process of setting up a team in India and exploring early stage investment options in the country’s growing startup base.
