Lukoil operations face fallout from Trump sanctions, Gunvor drops bid
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The US Treasury - which would have to approve any sale as Lukoil is under US sanctions - labelled potential buyer Gunvor a Kremlin “puppet”.
PHOTO: REUTERS
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- Gunvor withdrew its bid for Lukoil's foreign assets after the US Treasury hinted opposition, labelling Gunvor a Kremlin "puppet" due to sanctions.
- Moldova requested a temporary US sanctions exemption for Lukoil to maintain fuel supply and rejected Lukoil's offer to divest its assets.
- Lukoil's Teboil in Finland faces fuel shortages due to US sanctions, and Bulgaria considers seizing Lukoil's Burgas refinery.
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MOSCOW/LONDON - Lukoil’s international operations faced mounting disruptions on Nov 7 as a US deadline for companies to cut off business with the Russian oil company looms and after a hoped-for sale of the operations to Swiss trader Gunvor collapsed.
The US Treasury, which would have to approve any sale as Lukoil is under US sanctions, on Nov 7 labelled Gunvor a Kremlin “puppet” and signalled its opposition to the deal.
The United States sanctioned Lukoil and larger rival Rosneft
“The stark Treasury message is a signal to the market that those gambling on a speedy normalisation of the Russian energy trade will be disappointed,” said Mr Geoffrey Pyatt, senior managing director at McLarty Associates and former US assistant secretary of state for energy resources.
Analysts and oil executives said Lukoil will likely be forced to sell the assets at steep discounts by Treasury’s Nov 21 deadline for companies to halt business ties with the firm, possibly to a Western major.
“Now every subsequent buyer will demand a bigger discount than the deal with Gunvor implied – and in many ways, perhaps, that’s exactly what the Americans were counting on,” said Professor Igor Yushkov, of the Financial University of the Russian government.
In the latest fallout from the restrictions, Moldovan energy minister Dorin Junghietu said on Nov 7 that Lukoil will have to stop its operations in the country from Nov 21.
According to the minister, Lukoil owns a number of gasoline stations, supplies the oil market, and is the private owner of the airport’s only fuel storage, supply, and aircraft refuelling facility.
He said Moldova has requested a temporary exemption from Washington for Lukoil to operate in the country until it resolves the issue, so that the supply of fuel to Moldova is not disrupted.
He also said Moldova had decided to reject Lukoil’s offer to divest its assets and sell the airport infrastructure to another company.
Bulgarian authorities have in recent days sped up moves to hand control of Lukoil’s Burgas refinery to a special manager. Ruling party politicians have proposed a law which would enable this manager, if appointed, to sell the refinery without requiring Lukoil’s consent.
Lukoil’s fuel chain in Finland is running dry
In Finland, petrol station chain Teboil, owned by Lukoil, is running out of fuel as the US sanctions against its parent company prevented it from doing business, newspaper Helsingin Sanomat reported on Nov 7, citing a Teboil spokesperson.
“We are running down our fuel stocks, which means some stations are already out of certain fuel types and the number of such stations is growing daily,” Mr Toni Flyckt, Teboil’s marketing and communications director, told the newspaper.
The Kremlin said Lukoil’s international interests should be respected after Gunvor had withdrawn its bid for the assets.
Asked about the development, Kremlin spokesman Dmitry Peskov said it was commercial matter and related to what he called illegal US sanctions on Moscow, but that it was important that Lukoil’s interests were protected.
“We believe that all legitimate interests of a major international company, including a Russian one, like Lukoil, in terms of international trade and economic relations, must be respected,” said Mr Peskov. REUTERS
