"Lukoil has practically finished its international story": The energy giant is selling all of its foreign business operations

Russian energy giant Lukoil has announced the sale of all of its foreign business operations after the company was added to a list of sanctioned entities by the United States over the war in Ukraine, reports the Nova.rs portal.

As announced by the company's headquarters in Moscow, the decision to sell the assets was made "due to the introduction of restrictive measures against the company and its branches by certain countries," and the process of considering offers from potential buyers has been initiated.

The statement added that the sale will be conducted in accordance with a US Office of Foreign Assets Control (OFAC) liquidation license. If necessary, Lukoil will request an extension of the license to enable a smooth completion of the sales process and avoid additional penalties.

The United States has imposed a comprehensive package of sanctions on Lukoil, Rosneft and 34 of their subsidiaries, freezing all their assets in the United States and banning American companies from doing business with them. The US Treasury Department has given companies doing business with Lukoil and Rosneft a November 21 deadline to end their business relationships, after which they could face secondary sanctions — which would deny them access to American banks, insurers and trading networks.

US Treasury Secretary Scott Besant said the sanctions were imposed because "the Russian leadership is not showing a serious commitment to a peaceful resolution to the war in Ukraine," adding that Washington would continue to target sources of revenue that support the Russian military machine.

The move is part of a broader strategy by the United States and the European Union to limit Russian energy exports, which are the main source of funding for the state budget. According to Western analysts, oil and gas revenues provide more than 40 percent of the Russian Federation's total budget funds.

According to estimates by former company executives, Lukoil could lose around 30 percent of its revenue as a result of the sale, as it will have to give up three refineries and approximately half of the approximately 5.000 gas stations it owns abroad.

"Lukoil has practically ended its international story," a former company manager told Politiko, adding that the consequences will be "severe and long-term" for the company's operations and profitability.

In addition to losing markets, the company is also facing difficulties transporting crude oil, as many international shipping companies avoid cooperating with sanctioned entities. Although Lukoil claims that it will maintain production within Russia, experts estimate that the sanctions could also seriously affect domestic demand, given the reduced export opportunities.

The decision to sell the assets came just days after US President Donald Trump signed his first major package of sanctions against Russia, accusing Moscow of failing to take serious steps to stop the military offensive in Ukraine.

Trump canceled a planned meeting with President Vladimir Putin shortly before the sanctions were imposed, and the Kremlin responded by saying that the measures were "serious" but that they "would not crush the Russian economy," which was already accustomed to international restrictions.

Despite official optimism, economic experts in Russia warn that a new wave of sanctions could cause a decline in production in the energy sector and further reduce investment. A number of Western partners have already suspended cooperation with Lukoil, which further complicates the company's access to technological equipment, spare parts and service services needed to maintain refineries and wells.

While most European countries support Washington's measures, some countries, including Hungary, have called for a delay in the implementation of the sanctions. Prime Minister Viktor Orban plans to visit the United States next week in an attempt to secure a waiver that would allow Budapest to continue importing Russian oil and maintain favorable fuel prices on the domestic market.

Although Lukoil is expected to announce the first concrete offers for the sale of assets soon, market analysts predict that the process will take months, as the company will try to maintain as much value as possible at a time when Russian companies are under strong international pressure and political risk.

Moscow has described the decision to sell assets as "forced and politically motivated," while the Russian Energy Ministry claims that the sanctions "will not threaten the country's energy stability." However, independent economists warn that the sale of foreign facilities could weaken the global influence of Russian energy companies and reduce access to foreign exchange earnings.

Despite the Kremlin's attempts to downplay the move, the fact remains that Lukoil, Russia's second-largest oil producer, is entering a period of uncertainty without a significant presence on the world market. Analysts say it could change the structure of the global oil market, opening up space for competitors from the Middle East and Asia.