The group has acquired 527 Woolworths fuel stations as part of the agreement, as well as a further 16 sites under construction. BP already owns around 350 outlets in the country.
It is the third significant deal BP has announced this month, after scooping up a $2.2bn stake in Abu Dhabi oilfields and pouring almost $1bn into a "world-class" West African gas hub.
The tie-up with Woolworths was first proposed in September and will complete by January 2018, subject to regulatory approvals, BP said in a statement.
Read more: A dealmaking BP is emerging from crisis
BP and Woolworths will also pilot a forecourt convenience store chain, called Metro at BP, at 16 of its sites. This will later be rolled out to some 200 forecourts.
The trial follows in the footsteps of its Simply Food chain that it runs with Marks & Spencer in the UK.
Tufan Erginbilgic, chief executive of BP's downstream division, said:
The development of high-quality, differentiated fuel and convenience offers is a key part of BP’s strategy – allowing us to grow our marketing business in important global markets.
We are excited to be establishing this strategic partnership with Woolworths, one of Australia’s largest supermarket retailers. Globally we have developed a winning retail formula where we partner with strong local brands, like Marks & Spencer in the UK, to provide our customers with a convenience retail offer that meets the needs of their busy lifestyles.
The combination of all aspects of this strategic partnership is expected to create significant value for BP.
BP's share price was up one per cent in afternoon trading to 508p.
28 December 2016 @ 4:00pmBP (BP.)