FILE PHOTO: Vehicles drive past a BP (British Petroleum) petrol station in Liverpool, Britain, February 7, 2023. REUTERS/Phil Noble/File Photo

By Shadia Nasralla and Stephanie Kelly

LONDON (Reuters) -Oil major BP reported a smaller than expected fall in third-quarter underlying profit on Tuesday as a strong performance at all divisions led by refining helped to offset the impact of lower crude prices.

However, there was no update on the closely-watched sale process for its Castrol lubricants unit, the centre-piece of its $20 billion asset-sale drive to slash its debt pile.

After an ill-fated foray into renewables under previous CEO Bernard Looney, BP has vowed to increase profitability and cut costs while re-routing spending to focus on oil and gas.

BP in August launched a review of how best to develop and monetise its oil and gas production assets and when new Chair Albert Manifold took up his post last month he called for a deeper reshaping of BP's portfolio to increase profitability.

Reuters reported in May, citing sources, that BP had kicked off the sale of Castrol.

"Interest is strong. We're progressing well, and we'll update you when we're ready," CEO Murray Auchincloss said in a call with Reuters.

REFINING LIFTS RESULTS

BP said it made an underlying replacement cost profit, or adjusted net income, of $2.21 billion, compared with analysts' average estimate of $2.02 billion in a company-provided poll, and $2.27 billion a year ago.

All of BP's main units beat consensus forecasts.

BP's customers and products division, boosted by higher refining margins, posted a profit of $1.7 billion, outperforming last year's $381 million, when BP had a big outage at its U.S. Whiting refinery.

The customers division delivered its strongest third-quarter results on record, BP said, adding its refining availability was close to 97%, the best quarter in 20 years for the current portfolio.

BP shares erased earlier gains and were down 1.2% at 1008 GMT, outperforming a broader index of European energy companies, which was down 1.9%.

BP kept the pace of its quarterly share buyback programme at $750 million through the third quarter.

Auchincloss said he expected completed or announced asset sale agreements would reach around $5 billion this year, helped by selling minority stakes in its U.S. onshore pipelines announced on Monday.

LOWER OIL PRICES WEIGH ON INDUSTRY

Third-quarter profits at rivals Saudi Aramco, Shell and TotalEnergies all fell as average Brent crude oil prices dropped 13% year-on-year over the three months, but trading results, higher refining margins and higher output cushioned the impact.

BP's quarterly operating cash flow was $7.8 billion, above last year's $6.8 billion. As previously guided, net debt was steady at around $26 billion compared with the previous quarter.

BP aims to cut its net debt to between $14 billion and $18 billion by end-2027.

(Reporting by Shadia Nasralla and Stephanie Kelly. Editing by Kirsten Donovan and Mark Potter)