Collapse of Lukoil empire? US preparing cashless scheme to seize Russian assets - Reuters

The Russian oil company Lukoil is leaning toward a proposal from the American investment bank Xtellus Partners, which suggested the most unconventional scheme for buying out its overseas assets — without cash payments.

The plan involves exchanging Lukoil securities held by American investors for control over its global assets, including refineries, gas projects, and a network of gas stations, with a total value of $22 billion.

As a result of the deal, Lukoil would effectively regain its own securities without receiving cash — potentially making the transaction more acceptable to American regulators.

Following the imposition of sanctions, the US Treasury required Lukoil to sell all its foreign assets by January 17, 2025, with a portfolio valued at approximately $22 billion. This includes:

• Oil and gas fields;

• Refining capacities;

• A network of over 2,000 gas stations worldwide.

Negotiations are ongoing, and according to Reuters, Xtellus remains the frontrunner in the race for one of the largest sanctioned assets of the Russian economy. Competitors in the bidding included Carlyle and Chevron.

Obstacles from the US and Russia

The process is complicated by the need for approval from the US Treasury and potential consent from Russian authorities, as well as the risk of lawsuits if the deal falls through.

Any agreement with Lukoil requires official authorization from the US Treasury.

At the same time, Washington has set strict conditions:

• The deal must align with US national security interests;

• It must sever Lukoil’s ties with its foreign assets;

• The company cannot derive any financial benefit;

• Access to funds will remain blocked until sanctions are fully lifted.

For this reason, a cashless exchange, which gives Lukoil no "real" profit, is seen as the most acceptable scenario.

However, the Xtellus scheme carries a significant risk: the share exchange may require personal approval from Vladimir Putin, since trading Russian securities abroad has been effectively banned since 2022.

If the deal is not completed by January:

• The company’s foreign assets could end up in a legal limbo;

• They could be confiscated by local regulators;

• Lukoil would only be able to challenge the decision after sanctions are potentially lifted.

This scheme is part of the pressure on Moscow aimed at forcing peace negotiations over Ukraine and demonstrates how Western financial tools can be used to restrict the resources of Russian businesses on the international stage.

The US imposed sanctions on two Russian oil companies, Lukoil and Rosneft. Against this backdrop, several EU countries hosting Lukoil refineries have begun seeking solutions to prevent the shutdown of these plants.

At the same time, the US has extended the validity of the license that allows transactions and agreements for the sale of Lukoil’s foreign assets. The license, previously set to expire on December 13, has now been extended until January 17, 2026.