Lukoil plans single-package sale of overseas assets amid US sanctions

Lukoil, the Russian oil company sanctioned by the US, aims to dispose of its overseas assets as a single package.

According to a report by Bloomberg citing a source familiar with the matter, the company has determined its sales strategy in this direction.

The majority of potential buyers are interested only in specific assets of the company. The company’s insistence on a holistic sale is creating friction in negotiations between the parties.

The current situation increases the likelihood that the sale process of Lukoil’s overseas assets will take place in two stages.

In the first stage, a single buyer, such as a financial firm, could purchase all of the company’s overseas assets. In the second stage, these assets could be resold gradually in pieces.

Buyer pressure from the US administration

Another decisive factor in a possible agreement stands out as the attitude of the Washington administration.

Sources indicate that the US administration wants an American company to purchase Lukoil’s overseas assets.

This demand is considered a factor that narrows the pool of potential buyers.

Bloomberg lists US-based Exxon Mobil and Chevron, as well as the United Arab Emirates’ Abu Dhabi National Oil (Adnoc), among potential buyers.

The hedge fund Carlyle is also among the interested parties.

According to information provided by sources, Exxon and Chevron are examining Lukoil’s stake in the West Qurna-2 field in Iraq.

Adnoc, on the other hand, is focusing on different assets. The company is particularly interested in Lukoil’s natural gas production activities in Uzbekistan.

Sanctions and Moscow’s reaction

Lukoil made the decision to sell following the US Department of the Treasury’s imposition of sanctions on it and another Russian oil giant, Rosneft, at the end of last month.

The department explained this decision on the grounds of “Russia’s failure to show serious interest in the peace process.”

The US Department of the Treasury subsequently issued a license permitting the sale of Lukoil’s international commercial activities.

The Moscow administration considers the imposed sanctions illegal. In a statement evaluating the new restrictions, Russian President Vladimir Putin stated that these steps would be “serious” for the country and would have “certain consequences.”

However, Putin argued that the sanctions would not have a significant impact on the state’s “economic health.”

Process ends on December 13

Transactions regarding the sale of Lukoil’s overseas assets and the service of its overseas fuel stations are permitted until December 13.

Company management announced that negotiations with several potential buyers are ongoing.

Companies from different countries, such as the Kazakhstan company KazMunayGas, are also showing interest in Lukoil’s assets.

Hungarian Foreign Minister Péter Szijjártó expressed that the Russian company’s operations in Bulgaria could attract the interest of Hungarian energy companies.

The oil trading company Gunvor also attempted an acquisition, but an agreement could not be reached following an objection from the US Department of the Treasury.