By Andres Gonzalez

LONDON(Reuters) -BP has kicked off the sale of its more than a century-old Castrol lubricants business, according to two people with knowledge of the process, in a key step in the British energy group's divestment plan to boost its share price.  

BP hired investment bank Goldman Sachs to sell the unit, the sources said, speaking on condition of anonymity because the matter is private. The group has already contacted potential private equity and strategic bidders and distributed an information memorandum to them, one of the people said.

The group said in February it was reviewing Castrol as part of a plan to raise $20 billion by 2027 via asset sales to reduce its debt.

In March Reuters reported that Saudi Aramco was one of the parties considering a potential bid for the business, but the start of the sale process and Goldman Sachs' hiring have not been reported yet.

The sale could raise between $8 billion and $10 billion based on Castrol's projected core earnings (EBITDA) of $1 billion for 2024, a second person said.

Responding to a Reuters query, BP did not comment on the details of Castrol's sale but said its divestment programme was progressing and it had already signed agreements for the first $1.5 billion of its $20 billion target.

"To position us for growth and reduce net debt, we are reallocating capital and driving greater focus in our portfolio, including through the strategic review of Castrol," the company said in a statement.

Goldman Sachs declined to comment. 

Analysts at Bernstein said earlier this month that Castrol, which ranks as the world's third-largest standalone lubricants business behind those of Shell and ExxonMobil, could potentially fetch $10-$11 billion.  

Investors have put pressure on BP to improve profitability after its shares underperformed rivals, reflecting concerns it had put too much emphasis on renewable energy under former CEO Bernard Looney.

BP's shares have lost around a quarter of their value in the last 12 months, more than double the drop suffered by rival Shell.

While reducing overall investments, current CEO Murray Auchincloss has hiked spending on oil and gas and slashed BP's low-carbon budget.

BP's strategy is in the spotlight after activist investor Elliott Management took a stake in the company, and has been

asking the oil major for significant savings and management changes, Reuters reported in April.

GLOBAL BRAND

Founded in 1899, Castrol has been a sponsor of Formula 1 and World Rally Championship (WRC) teams, establishing a presence in more than 150 countries.

BP acquired Castrol in 2000, in a deal valued at 3 billion pounds. If successful, its sale would follow other deals, such as BP agreeing to sell a stake in a firm invested in the TANAP gas pipeline to Apollo Global Management.

As part of its broader asset sale plan, BP is also looking to sell its Gelsenkirchen refinery and its mobility and convenience businesses in Austria.

BP's divestments also include the sale of a 50% stake in Lightsource bp, with bidders due to be short-listed in July, Reuters reported. 

(Reporting by Andres Gonzalez, additional reporting by Shadia Nasralla, editing by Anousha Sakoui and Tomasz Janowski)