Lukoil has confirmed it has signed a deal with the US private equity firm Carlyle regarding the sale of its overseas assets. This decision comes in light of sanctions imposed by Washington on the Russian oil giant last year.
The specific financial details of the agreement weren’t disclosed, but it involves a large array of assets. This includes oil and gas fields ranging from Iraq to Mexico, thousands of gas stations across 20 countries, and refineries located in Bulgaria and Romania.
Lukoil emphasized that this agreement with Carlyle is conditional and not exclusive, meaning they are still open to negotiations with other interested parties. One of these includes a potential partnership between American oil company Chevron and Quantum Capital, a private equity firm.
In its financial statements for 2023, Lukoil reported that the total book value of its international operations stood at around $22 billion. However, it’s important to note that the Carlyle deal won’t extend to Lukoil’s interests in Kazakhstan, which include significant stakes in major oilfields and pipelines crucial for exporting oil from the region.
Kazakhstan’s energy minister announced that the country has activated a clause to acquire these assets from Lukoil and has formally requested approval from the US Treasury.
An insider familiar with the negotiations mentioned that while a provisional agreement has been reached, extensive due diligence is still required due to the complexity and scale of Lukoil’s global businesses.
Any final agreement must receive approval from the US Treasury, which has set strict regulations. These include ensuring that the deal completely separates the assets from Lukoil and that the resulting funds are placed in a bank account inaccessible to the Russian company until sanctions are lifted. The insider stated that Carlyle’s arrangement is expected to adhere to these US guidelines.
Carlyle expressed its intention to ensure “operational continuity,” maintain jobs, and support stable performance across the involved assets.
The US sanctions targeting Lukoil and another Russian oil firm, Rosneft, were implemented last year as part of a broader strategy to increase pressure on Russia over its actions in Ukraine. These restrictions impacted Lukoil’s operations significantly, prompting various governments to seek waivers to continue business activities.
Some of these waivers are set to expire on February 28, and Carlyle has sought extensions to facilitate its due diligence process.
Previously, another Swiss commodity trader, Gunvor, attempted to acquire Lukoil’s international business but abandoned the effort after facing political backlash from the Trump administration. Gunvor has since undergone significant restructuring, including a change in ownership and leadership.