News: UPDATE 1-Australia's Woolworths sells petrol chain to BP for $1.3 bln

(Adds Woolworths comment)

SYDNEY, Dec 28 (Reuters) - Australian supermarket giant Woolworths Ltd (WOW) is selling its chain of petrol stations to BP plc for A$1.8 billion ($1.29 billion) in cash, Woolworths said in a statement on Wednesday.

The sale of the fuel business, comprising 527 petrol stations and 16 development sites was flagged in September as part of a broader divestment drive at Woolworths.

"The release of $1.785 billion from the sale will be used to strengthen our balance sheet and reinvest in our core businesses," Woolworths Chief Executive Brad Banducci said in the statement.

The fuel business reported earnings before income tax and significant items of A$117.8 million for the year ended June 30.

"The sale of the fuel business is not expected to have a material impact on Woolworths Group earnings," the statement added.

The deal, which was signed on Christmas Eve, is subject to regulatory approval and is not expected to be completed until January 2018 at the earliest, the statement said.

It also involves an agreement to continue a fuel voucher scheme and the parties will jointly trial a convenience business at 200 of the petrol stations.

Caltex Australia (CTX) also bid for the business, but did not disclose a price in a statement in October. ($1 = 1.3926 Australian dollars)