BP has sold its Californian oil refinery to US firm Tesoro as part of a $38bn selling spree following the Gulf of Mexico disaster.

The British oil group sold the Carson refinery, south of Los Angeles, along with its 800 dealer-operated petrol stations across southern California, Arizona and Nevada for $2.5bn (£1.6bn) in cash.

The sale brings the divestments made by BP 2010 to $26.5bn. It said it was on track to achieve $38bn of asset sales by the end of next year.

BP has been selling off non-core assets since the Deepwater Horizon disaster in the Gulf of Mexico. The cost of the world’s biggest offshore spill is still rising, forcing the group to set aside a further $847m recently, which has increase the potential bill to $38bn. BP maintains that it has “turned the corner”, but its second-quarter figures disappointed the City with a 35% drop in underlying profits to $3.7bn.

BP has become a takeover target in the wake of the costly disaster, which has damaged its reputation and finances. The disposals have made it a “much smaller meal” to digest, according to Louise Cooper, analyst at City broker BGC Partners – it is “no longer a 10-course feast”.

The business remains under the cloud of the 2010 spill, as it is yet to reach a settlement with the US department of justice. In addition, BP is locked in a dispute with its partners in the Russian TNK-BP venture, which makes up a 10th of group profits.

As part of the refinery deal, BP is also selling storage and distribution assets, including more than 100 miles of pipeline and several marine, land storage and product marketing terminals.

New owner Tesoro will keep on the majority of the 1,700 staff at the refinery, petrol stations and other assets, although there could be some redundancies, said BP, which put Carson and Texas City refineries – two of its five in the US – up for sale in February 2011.

Carson produces 266,000 barrels a day. Texas City, which remains unsold turns 470,000 barrels into petrol and jet fuel but does not have the distribution network and other assets that Carson has.

Iain Conn, chief executive of BP’s global refining and marketing business, described the deal as a “significant step in the strategic refocusing of [BP’s] US fuels business”. He added: “Together with the intended sale of Texas City, this will allow us to focus BP’s operations and investments exclusively on our three northern US refineries and their large and important marketing businesses.”

The company is close to completing a multibillion dollar upgrade at its Whiting refinery in north-west Indiana, and is also upgrading at Cherry Point in north-west Washington to produce cleaner burning diesel fuel, as well as investing in a cleaner fuel project at its joint-venture near Toledo in Ohio.

The Carson deal is expected to close by the middle of next year.