Lukoil has agreed to sell its international business to Switzerland-based commodity trader Gunvor, the second-largest Russian oil company said on Thursday, a week after the U.S. slapped sanctions on Russia’s top oil firms, making doing business with their international subsidiaries extremely complex and nearly impossible.
Following the U.S. sanctions on Lukoil and Rosneft from last week, “as a result of Russia’s lack of serious commitment to a peace process to end the war in Ukraine,” Lukoil announced early this week that it would sell all of its international assets, initiating a formal process to receive bids from potential buyers.
The company stated on Monday that the asset sale is being carried out under a U.S. Office of Foreign Assets Control (OFAC) wind-down license, allowing operations to continue temporarily while transactions are completed.
Lukoil has faced escalating restrictions on its global operations since the onset of Western sanctions following Russia’s invasion of Ukraine. The company holds a range of international upstream and downstream assets across Europe, the Middle East, and Africa, including refineries in Italy and the Netherlands, and upstream stakes in Iraq, Uzbekistan, and West Africa.
On Thursday, Lukoil said in a statement that it had received – and accepted – an offer from trading giant Gunvor Group to buy Lukoil’s 100%-owned subsidiary LUKOIL International GmbH, which owns the international assets of LUKOIL Group.
“The key terms of the transaction have been earlier agreed by the parties,” the Russian company said.
The conclusion of the binding agreement for the transaction is subject to conditions, including obtaining OFAC permission by the Purchaser as well as any other applicable licenses, permits, and other authorizations in other applicable jurisdictions, Lukoil said.
If necessary, Gunvor and Lukoil will apply with OFAC for a license extension to complete the transaction.
Gunvor has ties to Russia—its co-founder and former shareholder Gennady Timchenko is believed to be a friend of Putin’s.
In 2014, the year in which Russia annexed Crimea from Ukraine, Timchenko sold his 43.5% stake in Gunvor to co-founder Torbjörn Törnqvist.
By Tsvetana Paraskova for Oilprice.com
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