Russia's Lukoil offloads international assets to Putin ally's company

Following the imposition of US sanctions, Russian oil company Lukoil is selling its international assets to Gunvor Group Ltd., registered in Cyprus.

Reuters writes that the key terms of the deal were agreed upon earlier. Gunvor will gain control of Lukoil International GmbH, a structure that owns the foreign assets of the Russian oil giant.

The amount of the deal has not been disclosed. At the same time, Lukoil has agreed not to negotiate with other potential buyers.

Gunvor Group

Gunvor Group was founded in 2000 by businessmen Torbjörn Törnqvist and Gennady Timchenko, who is considered one of the oligarchs closest to Russian President Vladimir Putin. Gunvor has long been the largest exporter of Russian oil.

After the annexation of Crimea in 2014, Timchenko sold his stake to Törnqvist so that the company could avoid sanctions. At the same time, the US Treasury Department claimed that Putin could have financial ties to Gunvor and access to its assets.

Background

On October 27, Russian oil company Lukoil announced its intention to sell its international assets after sanctions were imposed on it and its subsidiaries by the United States and other countries.

Reuters reported that Lukoil accounts for about 2% of global oil production. In particular, the company owns 75% of the shares in the West Qurna-2 field in Iraq, one of the largest in the world.

In addition, Lukoil's assets include an oil refinery in Bulgaria with a capacity of 190,000 barrels per day, as well as an oil refinery in Romania.

After the sanctions were imposed, Lukoil's shares plummeted on the Moscow Stock Exchange. In particular, they fell by 7.2% in two days, which corresponds to a loss of 297 billion rubles (about $3.66 billion).