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Russian oil giant Lukoil, which is under US sanctions, has agreed to sell its foreign assets to international commodity trader Gunvor, the company announced. “The key terms of the transaction were previously agreed upon by the parties. PJSC Lukoil, for its part, accepted the offer, agreeing not to negotiate with other potential buyers,” the press release read. The proposed acquisition concerns 100% of LUKOIL International GmbH, which was put up for sale due to sanctions. Analysts at Renaissance Capital estimate the assets’ value at $3-4 billion, including discounts. Lukoil added that completing the deal would require approval from the US Treasury’s Office of Foreign Assets Control (OFAC) to finalize a binding agreement. Approvals from other jurisdictions may also be necessary, in which case the companies plan to ask OFAC to extend the current license. The US imposed sanctions on Lukoil and Rosneft on Oct. 22, after the Kremlin refused to halt its war against Ukraine. The Treasury gave both companies one month to end all transactions. Lukoil, Russia’s second-largest oil producer, holds stakes in projects across Azerbaijan, Kazakhstan, Uzbekistan, Iraq, Egypt, and the UAE, as well as Latin America and Africa. It also owns refineries in Bulgaria, Romania, and the Netherlands, and a network of gas stations in the EU. Lukoil’s total foreign assets are worth approximately $10 billion. The company is owned by businessman Vagit Alekperov, Russia’s richest man with an estimated net worth of $28.7 billion. Gunvor was founded in 1997 by Swedish businessman Thorbjörn Törnqvist and billionaire Gennady Timchenko, a close associate of Russian President Vladimir Putin. For years, it was the largest exporter of Russian oil and among the world’s top three oil traders. After the annexation of Crimea, on the eve of US sanctions, Timchenko sold his stake to his partner. However, the US Treasury later claimed that Putin “has investments in Gunvor and access to its funds.” Lukoil announced on Oct. 28 that it plans to sell its international assets, citing “restrictive measures” imposed by several countries. A former executive told Politico the move could cut the company’s revenues and profits by about 30%, forcing it to sell three refineries and roughly half of its 5,000 gas stations abroad - adding, “Lukoil is finished.” The US Office of Foreign Assets Control (OFAC) has set a Nov. 21 deadline for Lukoil to wind down foreign operations or face heavy penalties. Washington also gave global firms a month to end dealings with Lukoil and Rosneft or risk secondary sanctions that would block access to US banks, traders, and insurers. Lukoil said it intends to comply and may seek an extension to maintain overseas operations. The Kremlin downplayed the impact, with Putin calling the sanctions “serious” but not devastating. Russia’s Foreign Ministry claimed the country had developed “strong immunity” to sanctions. Meanwhile, Bloomberg reported that Indian refineries are expected to halt Russian oil imports, while the UK sanctioned Lukoil and Rosneft on Oct. 15 for helping Moscow evade restrictions.
