Russia’s second-largest oil producer, Lukoil, has agreed to sell the bulk of its international assets on a conditional basis to US private equity firm Carlyle Group.
The agreement, if approved, would be a landmark transaction structured to meet the conditions set by the US Office of Foreign Assets Control (Ofac). The deal, announced on Thursday, depends on receiving regulatory approvals including Ofac clearance, and excludes Lukoil’s holdings in Kazakhstan.
Lukoil said that the agreement with Carlyle was “not exclusive for the company” and that it was also continuing negotiations “with other potential purchasers”.
Analysts collectively value the assets for sale at around $22 billion. They represent the bulk of the company’s international assets and include upstream oil and gasfields, refineries in Bulgaria and Romania, petrol station networks across the Americas and Europe, and stakes in major Middle Eastern oil and gas upstream development projects.
In the Middle East, Lukoil’s most prized holding is its 75 per cent stake in Iraq’s West Qurna-2 oilfield, one of the world’s largest, producing roughly 460,000 to 480,000 barrels per day, which is about 0.5 per cent of global oil supply, and accounting for nearly 9 per cent of Iraq’s output.
Earlier in January, Iraq’s cabinet approved the nationalisation of petroleum operations at West Qurna 2 to prevent production disruptions caused by sanctions on Lukoil.
Lukoil declared force majeure in November at the oilfield after it was hit with sanctions alongside Rosneft, as part of US President Donald Trump's push to end the war in Ukraine.
Force majeure refers to an unforeseen set of circumstances preventing a party from fulfilling a contract.
The firm also holds a 60 per cent interest in Iraq’s Block 10 (Eridu) and a 50 per cent stake in Egypt’s West Esh El Mallaha fields. It also held a 10 per cent share in Abu Dhabi’s Ghasha gas concession, which it sold in November.
The UAE's International Holding Company (IHC) had previously expressed interest in buying Lukoil's foreign assets. IHC, the UAE's largest company by market capitalisation, told The National in November that it was in talks with Ofac over those international assets.
