KEY POINTS
- BP plans to sell up to 49 percent of its pipeline network.
- The sale is part of a strategy to reduce rising debt levels.
- Existing pipeline assets gain value amid permitting challenges.
BP is seeking buyers for a stake in its U.S. natural gas pipeline network, according to sources familiar with the matter. The move, potentially raising up to $3 billion, is part of a broader strategy under CEO Murray Auchincloss to reduce the company’s debt while improving cash flow.
The British energy giant is reportedly considering selling up to 49 percent of its pipeline business, reflecting a shift in priorities amid increased investor scrutiny.
A move to tackle rising debt
BP’s decision to offload a portion of its pipeline assets comes at a time when its net debt has climbed to $24.3 billion as of September, compared to $22.3 billion the previous year.
The company attributed the rise to slower-than-expected asset sales. Alongside this sale, BP is also exploring divestments in its Lightsource BP solar business, onshore wind division, and offshore wind operations.
This effort forms part of Auchincloss’s broader strategy to streamline BP’s portfolio and enhance profitability as the company faces pressure over its energy transition plans.
BP’s share performance has lagged behind its competitors, with shares dropping over 18% this year, a stark contrast to rivals like ExxonMobil and Chevron, whose shares have seen gains.
Why pipeline assets are key
BP’s pipeline network spans approximately 1,500 miles and transports over 1.1 million barrels of crude oil, natural gas, and fuels daily across the United States.
This infrastructure is critical in a U.S. energy market that is witnessing increased consolidation. With permitting challenges for new pipelines and growing production levels, existing assets have become more valuable, creating an opportunity for companies like BP to capitalize on investor demand.
While BP declined to comment on the matter, the sale reflects the company’s strategy to unlock value from its midstream assets in an increasingly competitive energy market.
According to Reuters, by leveraging the growing worth of existing pipeline infrastructure, BP hopes to address investor concerns and improve its overall financial health.
A broader strategy for the future
As part of a comprehensive review, Auchincloss plans to update BP’s strategy in February.
Investors are looking for clarity on how the company will balance its traditional oil and gas operations with its commitment to the energy transition.
The pipeline sale, alongside other asset divestments, will likely be a key part of this evolving strategy.
Despite the challenges, BP remains one of the world’s largest energy firms, and its moves in the U.S. market underscore its ongoing efforts to adapt to shifting dynamics in the energy sector.
