Lukoil to offload global assets after fresh Western sanctions

Russian oil giant Lukoil looks to sell its international operations after being hit with new US sanctions in response to the ongoing war in Ukraine.

IMAGE: Getty Images

The sanctions, unveiled last Wednesday, target both Rosneft and Lukoil, Russia's two largest oil producers. The US sanctions announcement has rattled markets and driven oil prices higher.

The US Department of the Treasury has given other companies until 21 November to “wind down” any existing dealings with the sanctioned Russian entities or their affiliates.

The US announced sanctions a week after the UK said it will step up sanctions on Lukoil and Rosneft and target 44 shadow fleet tankers transporting oil for Russian companies.

A day after the US, the EU adopted its 19th sanctions package on Russia. It added 117 shadow fleet vessels to its sanctions list and banned all transactions with Rosneft and Gazprom Neft. It will also ban all imports of Russian LNG from 2027.

In a statement, Lukoil said: "Owing to the introduction of restrictive measures against the Company and its subsidiaries by some states, the company announces its intention to sell its international assets."

Lukoil has begun considering bids from potential buyers. The company says it will sell its assets under the US Office of Foreign Assets Control's (OFAC) wind-down license. It might seek to extend this license to ensure that its foreign subsidiaries can continue to operate uninterrupted.

Daniel Hynes, senior commodity strategist at ANZ Bank, said, "The [oil] market was surprised by the US move to sanction two of Russia’s biggest oil producers, Rosneft PJSC and Lukoil PJSC, which together make up nearly half of the country’s total crude exports."

Lukoil Bulgaria, one of the company’s key subsidiaries, is a bunker fuel supplier in the Black Sea region.

By Gautamee Hazarika

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