Russian oil major Lukoil has announced plans to divest its foreign assets following the imposition of Western sanctions on the company and its subsidiaries. The move comes after the US and UK imposed sanctions on Lukoil and fellow Russian oil producer Rosneft, citing Moscow’s alleged lack of commitment to the Ukraine peace process. The sanctions triggered a spike in global oil prices, with Lukoil’s operations allowed to continue until November 21 under a US Treasury license.
Lukoil, Russia’s second-largest oil producer, accounts for around 2% of global output and employs over 100,000 people globally. The company operates projects in various regions, including the Balkans, Middle East, Africa, Central Asia, and the US. As of 2024, Lukoil maintained a retail network of approximately 2,500 fuel stations in 20 countries, exporting 730,000 barrels of crude per day and around 300,000 barrels of petroleum products per day. The company reported a net profit of $10 billion in 2024.
According to a press release, Lukoil has started considering bids from potential buyers as part of its divestment process. The company may seek to extend the wind-down license to ensure uninterrupted operations of its international assets. The sanctions imposed by the US and UK are part of a broader effort to pressure Russia over its actions in Ukraine. Moscow has maintained that it is seeking a lasting solution to the conflict, while Kiev and its Western backers have called for an immediate ceasefire.
The Russian government has long argued that Western sanctions are illegal and counterproductive, with President Vladimir Putin describing the latest move as “unfriendly” but not significant to the economy. Putin’s aide, Kirill Dmitriev, emphasized that constructive dialogue is necessary to resolve the situation, stating that “the language of pressure does not work with Russia.”
The divestment of Lukoil’s foreign assets marks a significant development in the ongoing tensions between Russia and the West. As the situation continues to unfold, the impact on global oil prices and the Russian economy remains to be seen. With Lukoil’s operations set to continue until November 21, the company’s next steps and the response from potential buyers will be closely watched in the coming weeks.