Subsidiary Express: Lukoil's foreign assets can be sold for a third of their value
The discount on the sale of Lukoil's foreign assets may amount to 70%, Izvestia has learned. The day before, the company announced its intention to sell foreign subsidiaries. According to experts, they can be estimated at $10 billion in total, but in fact the organization will receive a third of the market price — $ 3 billion, since the time limit for implementation until November 21 and sanctions pressure will play in favor of the discount. Lukoil's assets include a network of gas stations in 20 countries, three refineries in Europe, and others. Analysts do not rule out that the company will retain its subsidiaries located in friendly countries. In their opinion, the most favorable scenario is for Middle East funds to enter into a deal, but this is more likely possible for assets outside the EU and the United States. Which Lukoil facilities may be on sale and who is interested in acquiring them — in the Izvestia article.
What the Russian company sells
After the introduction of US sanctions against Lukoil, the company decided to sell its foreign assets, which are located on almost all continents. Currently, it owns three refineries in Europe, a network of gas stations in 20 countries, oil production in Austria and Finland, participates in the development of fields in Azerbaijan, Kazakhstan and Uzbekistan, in projects in Egypt, Cameroon, Nigeria, Ghana and others, is present in the fields of Mexico, is one of the largest shareholders of the Caspian Pipeline the Consortium (CPC).
Lukoil, through its trading subsidiary Litasco, fully owns two refineries in Europe (Petrotel Lukoil in Romania and Lukoil Neftochim Burgas in Bulgaria), as well as a 45% stake in the Zeeland refinery in the Netherlands. Also, at the end of 2024, the company had an extensive network of 2,4 thousand. There are gas stations in 20 countries, including the USA and Europe. In addition, Lukoil participates in the development of the Shah Deniz fields in Azerbaijan (19.99% share), Karachaganak and Tengiz in Kazakhstan (13.5% and 5%, respectively), Kanlym–Khauzak-Shady and Gissar in Uzbekistan, it is also one of the largest shareholders of CPC. In the Middle East, the company is developing the West Qurna–2 and Eridu fields in Iraq, and owns 10% in the Ghasha oil and gas project in Abu Dhabi. In Africa, Lukoil participates in projects in Egypt (West Esh El-Mallaha, WEEM Extension and Meleya), Cameroon (Etinde site), Nigeria (OML-140 block), Ghana (Deepwater Tano Cape Three Points block), Republic of Congo (Marine XII project). In addition, the Russian company is present in the fields of Mexico: blocks 10, 12, 28 jointly with the Italian Eni, the Amatitlan block, as well as block No. 4 jointly with the Mexican PetroBal.
Lukoil has always positioned itself as a national company that actively promotes the interests of the Russian Federation in new foreign markets, said Yuri Stankevich, Deputy Chairman of the State Duma Committee on Energy.
— I believe that the announced decision to find buyers is dictated by the desire to hedge risks for the Russian oil industry and quickly rebuild business processes in the context of the ongoing geopolitical storm. Even a ship capable of long—term autonomous navigation sometimes needs to return to its home harbor," he told Izvestia.
According to the Director General of the Independent Analytical Agency of the Oil and Gas Sector (NAANS-Media LLC) Tamara Safonova, Lukoil is the most internationally integrated Russian company in the oil and gas sector. It is actively developing both the segments of extraction, processing, and sale of fuels and oils in foreign countries.
"The organization has also created the largest trading divisions that provide operations not only for the sale of the group's products, but also for other suppliers on the international market," she stressed.
In their estimates, experts agree that today the market price of these assets is about $10 billion.
— According to rough estimates, the total EBITDA (income before income tax, interest on loans and depreciation) of Lukoil's foreign facilities, where the company's share exceeds 50%, is $2-3 billion. Based on the overall estimate, the value of such assets may be about $10 billion. Additionally, the organization has minority stakes in other assets, which are difficult to assess in general," said Dmitry Scriabin, Portfolio Manager at Alfa Capital Management Company.
Dmitry Kasatkin, Managing Partner of Kasatkin Consulting, agrees with him. In his opinion, the market value of Lukoil's foreign subsidiaries is also about $10 billion.
However, in his opinion, in the current situation, these assets are likely to go for a third of the market value.
— The discount will depend on many introductory factors: timing, participants in the transaction, geopolitics, positions of the parties. Previously, we can talk about a discount of up to 70% in unfriendly jurisdictions and up to 50% in neutral and friendly ones," he believes.
Izvestia sent a request to Lukoil.
Why will they sell it cheaper
The forced sale and sanctions pressure will imply a discount to the market price, Dmitry Scriabin added.
— However, it is difficult to name a specific discount amount. At the same time, the sale of assets will not have a significant impact on the global oil market," he believes.
Recall that after the imposition of sanctions against Lukoil, the US Treasury allowed operations with sanctioned companies until November 21.
— It is very difficult to make a deal before this date, unless, of course, preparatory work has been carried out. Usually, the time frame for such transactions is 6-12 months," Dmitry Kasatkin said.
In its statement on the sale of assets, the Russian company stressed that their "sale is carried out in accordance with the license of OFAC (Office of Foreign Assets Control of the US Treasury) to cease operations." If necessary, the organization can apply for a license extension to ensure their smooth operation.
Lukoil shares lost slightly more than 7% in value after the announcement of the sale of foreign assets. According to Ekaterina Kosareva, Managing partner of VMT Consult, a period of increased volatility is coming for the company's securities.
— All the news on this topic will put pressure on the quotes. In particular, information about whether the OFAC license will be renewed. Lukoil is currently trying to avoid the risk of full asset confiscation in unfriendly countries. And a lot will depend on how much time the company will have to realize its assets. For minority shareholders, the key issue will be to preserve the company's dividend attractiveness," the expert believes.
According to Dmitry Scriabin, the prospects for extending the American license are unclear, since the United States can make any decision.: how to do it, and not. In general, extending the terms of OFAC general licenses is not uncommon, says Vladislav Bedrosov, Project Manager at Vegas-Lex Law firm.
— Recent examples include the extension of the General License 115A, which prohibits transactions related to the use of nuclear energy and with major Russian banks. In this example, the deadline was extended from June to December 2025," the lawyer explained.
In turn, Dmitry Kasatkin notes: after the license expires, OFAC will essentially enter into the transaction as a third party and will significantly influence the process, including the choice of the buyer. In this case, there may be scenarios of nationalization of Lukoil's assets by the governments of the countries in which they are located, as well as the introduction of temporary management, so the company will obviously be in a hurry, the Izvestia interlocutor believes.
Will everything be sold
According to Dmitry Kasatkin, the most favorable scenario is the entry of funds from the Middle East into the deal, but this is more likely possible for facilities outside the EU and the United States.
At the same time, the analyst believes that not all of them will actually be sold. Most likely, the company will get rid of assets in the USA and the EU and retain subsidiaries in the CIS and the Middle East, "possibly through a transfer to a friendly party."
SOCAR of Azerbaijan was previously considered as possible buyers of the plant in Bulgaria, in addition, Hungarian MOL and Kazakh Kazmunaygas were also mentioned, said Valery Andrianov, associate professor at the Financial University under the Government. According to the Bulgarian side, the full list of applicants includes 24 companies, seven of which have a real chance of purchase.
Lukoil headquarters in Sofia, Bulgaria
— At the same time, the Bulgarian opposition would like to keep this enterprise in the ownership of the country. But such an option is unlikely, it is unlikely that there will be funds in the national treasury to buy out the enterprise. There are also a number of applicants for the plant in Romania. In particular, Shell or Orlen companies were named," the expert noted.
According to him, one should not expect that the sale of these assets will cover the costs of their acquisition and development.
— In fact, we are dealing with partly confiscatory methods, with coercion to a deal, which under normal conditions is a criminal offense. This once again underlines the illegal nature of Western sanctions, which runs counter to any international norms and market laws," said Valery Andrianov.
According to Dmitry Kasatkin, sanctions against Russian oil companies and the forced sale of assets are "another trigger for the continued outflow of Middle Eastern and Asian investments from the EU, as well as a decrease in interest in placing business in the US jurisdiction."
Lukoil's case continues to undermine the main pillar of the attractiveness of doing business in the West — the rule of law, the source concluded.
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