US sanctions have brought Lukoil to its knees: the company has written off nearly $20 billion
The Russian company Lukoil has written off its investments in foreign assets in full after the US placed it on a sanctions list. This is stated in the company’s financial report, which was highlighted by Bloomberg.
At the end of last year, Russia’s second-largest oil producer recognised an impairment loss of 1.67 trillion roubles, or $19.8 billion. This led to a net loss of 1.06 trillion roubles, whereas a year earlier the company had reported a profit.
As noted, the US imposed sanctions against Lukoil and Rosneft in an attempt to increase pressure on the Kremlin over the war against Ukraine. Following this, the company lost control of its international business.
The article states that the sanctions triggered a wave of repercussions in the countries where Lukoil operates and forced the company to put its overseas assets up for sale. For Lukoil, which was the most internationally diversified of the major Russian oil companies, this was a particularly painful blow.
The company owns stakes in oil refineries across Europe, significant assets in oil fields stretching from Iraq to Kazakhstan, and a network of 5,300 petrol stations in 20 countries, including the US.
In January, Lukoil agreed to sell the majority of its international assets to the investment firm Carlyle Group. This followed the collapse of a previous deal with the Gunvor Group. However, the transaction itself still requires regulatory approvals, and the company is simultaneously holding talks with other potential buyers.
In its report, Lukoil noted that the sale is “entirely” dependent on the decision of the US Office of Foreign Assets Control (OFAC). If the deal is approved, the proceeds, as stated in the document, will most likely be credited to a special account, and can only be withdrawn once the sanctions are lifted.
The company has already recorded the results of its foreign assets in its financial statements as discontinued operations.
As a reminder, Trump has extended US sanctions against Russia for another year due to the war in Ukraine
