Saudi Aramco exploring initial bid for BP's Castrol unit, source says

(Reuters) - Saudi Aramco is successful the aboriginal stages of considering a imaginable bid for BP's lubricant concern Castrol, according to a idiosyncratic with cognition of the matter.

BP has been exploring each options astir its Castrol business, including a imaginable sale, arsenic portion of a strategical review.

The concern would beryllium expected to beryllium worthy astir $6 cardinal to $8 billion, Ashley Kelty, an expert astatine Panmure Liberum, said successful a enactment past week.

A BP spokesperson declined to comment. Aramco did not instantly respond to a Reuters petition for comment.

BP shares were up 1% astatine 412.15p astatine 1332 GMT.

Bloomberg News was archetypal to study astir Aramco's involvement successful Castrol connected Wednesday, which comes a time aft the Saudi lipid elephantine reported a driblet successful its yearly nett and signalled it volition slash its dividend payouts by astir a 3rd this year.

BP said past week it was reviewing its lubricants business, Castrol, and targeting $20 cardinal successful divestments by 2027.

The divestment programme is simply a cardinal portion of CEO Murray Auchincloss' strategy to trim superior expenditures, chopped costs, divest assets, and thrust higher currency travel and returns, yet aiming to reconstruct capitalist assurance and heighten earnings.

BP, which has underperformed peers similar Shell and Exxon, has travel nether expanding unit to alteration strategy aft quality that U.S. activistic capitalist Elliott Investment Management has built a 5% involvement successful the company.

According to Elliott, BP would payment from selling its Castrol lubricants and its web of work stations to unlock worth and boost stock buybacks, a root told Reuters past week.

Bloomberg's study said Aramco hasn't made a last determination connected the operation of a imaginable bid for Castrol oregon whether it volition proceed arsenic deliberations are inactive successful the aboriginal stage.

(Reporting by Pushkala Aripaka, Prerna Bedi Shanima A successful Bengaluru and Arunima Kumar successful Mumbai; Editing by Sherry Jacob-Phillips, Leroy Leo and Frances Kerry)