Trump is losing patienceRussian oil giant Lukoil is reeling
Russian oil company Lukoil is in serious trouble due to US sanctions. The company was under great time pressure to sell its overseas subsidiaries. But America is blocking this.
Russian oil company Lukoil is in an existential crisis. The cause is the sanctions imposed by the US government. As a consequence, the company must separate itself from its overseas subsidiaries by November 21 – or risk having to write off its entire investment. Lukoil found a buyer in raw materials trader Gunvor at the right time. But the US blocked the deal and the Swiss-based company withdrew the offer.
Earlier, in an interview, Gunvor boss Torbjorn Tornqvist highlighted the problems Lukoil faced in negotiating the deal: “Lukoil’s entire international activity is paralyzed. Nobody can do business with them,” he told the Financial Times. According to the newspaper, the foreign subsidiary is worth $14 billion.
Gunvor became the world’s largest Russian oil trader in the 2000s. In the past, the company has repeatedly been accused of being close to the Kremlin and the Russian president. Gunvor denied the allegations.
However, the US government saw it differently. The Finance Ministry described Gunvor as a “Kremlin puppet” and announced its rejection of the deal. As long as Russian President Vladimir Putin continues his “senseless killings” (in Ukraine), Gunvor will never receive a pass. The company disputed the designation and called it “fundamentally misinformed and untrue.” We welcome the opportunity to correct this “obvious misunderstanding.”
The impact is already visible
Time is running out for Lukoil. “The owners are already preparing for the possibility that their assets could simply be taken away” – by the country where they are located,” the Financial Times” quoted a Russian oil market insider as saying. According to the Treasury Department, US sanctions in practice prohibit any economic interaction with Lukoil and its subsidiaries – not only for US companies, but also foreign companies. The Treasury Department explicitly warned banks not to continue doing business with Russia’s energy industry. These institutions could then be excluded from the US financial system.
The White House imposed sanctions on Russian oil companies Lukoil and Rosneft in October and set a November 21 deadline to halt all business with the two companies. Anyone who continues to do business with them risks secondary sanctions from the US.
The move marks a clear shift in US President Donald Trump’s policy towards Russia. “In light of Vladimir Putin’s refusal to end this senseless war (in Ukraine), the Treasury Department is imposing sanctions on two of Russia’s largest oil companies that finance the Kremlin’s war machine,” Treasury Secretary Scott Bessent said in a statement. His growing frustration with the Russian president also led Trump to cancel plans for a summit in Hungary.
The impact of sanctions is already being felt. In Finland, around 1,000 employees of the Teboil gas station chain are worried about their jobs. According to banking association Finance Finland, Finnish banks have started freezing payments to Lukoil subsidiaries. And in Iraq, state-owned company Somo canceled the loading of crude oil cargoes from the West Qurna-2 field, in which Lukoil has a 75 percent stake. In Bulgaria, the ruling coalition is preparing legislative changes that would allow it to take over the Lukoil refinery – the country’s only refinery – to prevent a shutdown that could threaten the country’s fuel supplies.
Mysterious death
Lukoil also owns one of the largest refineries in Romania and shares a refinery in the Netherlands; also gas stations in Italy, Serbia, Montenegro and Macedonia, among others.
In contrast to the state-owned company Rosneft, Lukoil focuses on foreign business. Given US sanctions, the future is likely to be difficult as the domestic market is dominated by Rosneft and state-owned energy company Gazprom Neft. Now there is speculation that Rosneft could swallow Lukoil. The company, run by Putin confidant Igor Sechin, has attempted to take over Lukoil several times in the past. But the Kremlin has so far rejected this. Lukoil is officially a private company.
Recently this issue made headlines due to a series of deaths of Russian oligarchs, managers and politicians with ties to the energy sector. A high-level Lukoil manager also died.
According to official information, the then CEO of Lukoil died in the fall of 2022 due to a fall from a hospital window. A former colleague on the board of directors has previously died – according to Russian media reports, due to a strange ritual with a shaman gone wrong. The new CEO died in 2023 – according to the company, from acute heart failure. Last year, Lukoil’s vice president was found dead in his office.
