US delays sanctions on Lukoil: Here's why
Photo: The US postponed sanctions against Lukoil (Getty Images)
The US Department of the Treasury has extended the deadline after which the sanctions against Russia’s Lukoil will take effect, so that the company can carry out transactions related to the sale of its international assets, according to Bloomberg.
According to the outlet, the administration of US President Donald Trump has made an exception to the sanctions for certain transactions of PJSC Lukoil, increasing engagement with foreign governments and potential buyers regarding the international assets of the Russian oil company.
The US Department of the Treasury issued a license for certain operations related to the company’s retail gas stations and contracts for the sale of its international assets until December 13.
An exception was also made for deals involving Lukoil’s divisions in Bulgaria – the sanctions were postponed until April 29.
At the same time, Bloomberg’s sources reported that interest in purchasing Lukoil's foreign assets has grown in recent days. Potential buyers from the US, Europe, and the Persian Gulf have contacted the Department of the Treasury for permission to cooperate with the company.
One of the options under consideration involves a main buyer acquiring most of the international assets, as well as several smaller deals.
It is noted that Lukoil holds stakes in oil refineries in Europe, as well as significant assets in oil fields from Iraq to Kazakhstan. Its brand also extends to gas stations from the US to Belgium and Romania.
US sanctions against Russian oil
As a reminder, in October the US announced sanctions against Russia's two largest oil companies – Rosneft and Lukoil, in order to force Russian dictator Vladimir Putin to sit down at the negotiating table with Ukraine.
The new restrictions from Washington affect not only the two main Russian companies but also 36 subsidiaries.
After the sanctions were announced, several European countries hosting Lukoil refineries began searching for solutions to prevent the shutdown of the plants.
In particular, the Bulgarian parliament allowed the government to appoint a new head of the refinery. The plant may be nationalized and then sold to new owners. Meanwhile, Romania wants to obtain a postponement of the sanctions from the US.
In addition, Lukoil announced "force majeure" at the giant West Qurna-2 oil field in Iraq, and halted its operations.
It was also reported that Moldovan officials are discussing with Lukoil the possibility of purchasing the company's facilities at Chisinau Airport. In particular, Lukoil was offered to sell its airport infrastructure, including the aviation fuel depot.
Romania, for its part, believes it is necessary to take control of Petrotel Lukoil – Lukoil's Romanian company.
Recently, information surfaced that Lukoil may sell its foreign assets to the Swiss company Gunvor.
At the same time, it was recently reported that Lukoil has appealed to the US Department of the Treasury to extend the time allotted to complete operations after the sanctions were introduced.
