Russian oil giant risks losing €14 billion in assets, faces Rosneft takeover After US sanctions

The failed sale of Lukoil’s foreign business to the commodity trading firm Gunvor has plunged the Russian oil company into crisis, raising the risk of losing assets worth €14 billion and fueling speculation about a potential takeover by domestic rival Rosneft.

Washington last week blocked the commodity trader’s attempt to acquire Lukoil International due to new US sanctions against Russia’s second-largest oil group, saying it would not grant a license to operate assets to “a Kremlin puppet” like Gunvor, Caliber.Az reports, citing the British newspaper Financial Times (FT).

Lukoil has until November 21 to sell or write off its international operations — built over decades — as Western companies rush to meet the US-imposed deadline for cutting ties.

“Some of the original bidders who were turned down in favour of Gunvor might try again,” said one insider from the Russian oil market. “But Lukoil’s owners are already bracing for the possibility that their assets could simply be taken away” by the countries in which they are based.

The US decision to block the Gunvor deal has left Lukoil’s outlook bleak. Following the end of its international expansion, the company’s growth potential in the domestic market — dominated by Igor Sechin’s Rosneft and Gazprom Neft — remains limited.

“At home, everything has been handed to Rosneft and Gazprom Neft,” while “going abroad is no longer an option,” said Vladimir Milov, who served as Russia’s deputy energy minister in the early 2000s. “Lukoil has no business future. It’s a company with its wings clipped.”

Speculation has resurfaced that Rosneft may finally move to take control of Lukoil. Although President Vladimir Putin has repeatedly blocked Sechin’s previous attempts to acquire his competitor, sources in the Russian energy sector say some insiders believe a window for such a takeover may have now opened.

“Sechin has never let go of the idea of taking over Lukoil,” said a source who previously worked with Rosneft. “Every few months, he goes to the top with a new proposal. But so far — nothing.”

The €14 billion figure that Lukoil stands to lose reflects the minimum value of its foreign subsidiaries in which the company holds controlling stakes, according to Financial Times calculations based on documents filed by the group’s main international unit in Austria and its subsidiaries in the Netherlands.

Such a loss would represent the most severe blow to the Russian company to date.

By Jeyhun Aghazada