Exxon, Chevron, ADNOC, Others, Eye Lukoil International Assets

Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)

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Summary

Upcoming U.S. sanctions on Russia's top oil producers have led Lukoil to consider selling its international assets. Several energy majors have, at least unofficially, expressed interest.

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U.S. Denial of Gunvor Offer for Lukoil Opens Door for Others

With Russia's Lukoil PJSC (Moscow) about to be sanctioned beginning December 13 by the U.S. Treasury Department due to Russia's military activity in Ukraine, Lukoil's attempts to sell its $22 billion in foreign assets is drawing a crowd of tire-kickers.

Bloomberg and Reuters have reported that international oil giants Exxon Mobil Corporation (Spring, Texas), Chevron Corporation (Houston, Texas), and Abu Dhabi Oil Company (ADNOC) (United Arab Emirates) are considering bids for Lukoil along with U.S. investment firm Carlyle Group (Washington, D.C.).

The first buyer to line up was oil trading firm Gunvor Group (Geneva, Switzerland). But due to Gunvor's association with Russia--for a while it was co-owned by Gennady Timchenko, who was a reputed associate of Russian President Vladimir Putin--the Treasury Department called Gunvor "the Kremlin's puppet" and said it would never get a license to operate Lukoil's assets. For more information, see November 10, 2025, article - Swiss Trader Gunvor Backs Off Deal to Buy Lukoil Assets.

Bite Size or Swallow it Whole?

While some potential buyers are looking to cherry pick certain assets, reports are that Lukoil wants to sell its assets as a whole. Altogether, those assets account for about 0.5% of total world oil production.

Bloomberg reported that Exxon and Chevron are considering Lukoil's interest in Iraq's West Qurna 2 oil field. Lukoil is the operator there, in what is considered its most valuable foreign asset. And XRG, ADNOC's investment subsidiary, is reported to be considering Lukoil's natural gas operations in Uzbekistan. And, said Reuters, Exxon is looking at assets in Kazakhstan's Karachaganak and Tengiz fields, where Exxon and Lukoil both hold interests.

With few looking to accede to Lukoil's preference to transfer its assets in a single transaction, some analysts see a possible third alternative. An investment company, such as Carlyle Group, could buy the whole package, then sell it off in segments.

U.S.' Russian Oil Ban Affects India and Other Importers

Pressure for Lukoil to sell its foreign assets is rising as the U.S. ban is set to take effect, along with sanctions by the U.K. News media in India reported that its oil imports from Lukoil and fellow Russian energy firm Rosneft (Moscow) have dropped 66% due to the U.S. action. India's imports fell to 672,000 barrels per day (BBL/d) in early November, compared to 1.88 BBL/d in October.

Together, Rosneft and Lukoil export about 3.1 million BBL/d, largely to east and south Asia.

India, China and Turkey are among the largest buyers, and the latter two have also reported taking less of it since the sanctions were announced. Indian newspaper Pragativadi reported that China's Russian imports dropped by 47% and Turkey's by 87% in early November. Almost half of the tankers leaving Russian ports have no declared destinations.

Chinese state oil companies PetroChina, Sinopec, CNOOC and Zhenhua Oil plan to stop dealing in seaborne Russian crude oil supplies. In fact, China has announced that, at least for the near future, it will not receive any Russian seaborne oil.

China normally imports about 2.1 million BBL/d from Russia, with tankers supplying about 1.3 million of those barrels. The rest comes by land through the ESPO pipeline.

India-U.S. LPG Deal

Refineries in importing countries will be scrambling to replace Russian oil. As part of that effort, India's state-run refineries just signed a one-year agreement to buy 2.2 million tonnes of liquefied petroleum gas (LPG) from the U.S.

The main purpose of the Indian deal is to meet the Trump administration's demand for India to reduce the trade imbalance between the two nations, but its secondary benefit will be to replace some Russian oil and gas imports.

Reuters reported that some major Chinese refineries are going into a maintenance cycle, so that it also is importing less crude from Saudi Arabia, so there may be less demand overall, at least temporarily.

The stated goal of the U.S. and U.K. sanctions is to pressure Russia to negotiate a peace treaty with Ukraine. Russian activity in Ukraine is reaching its fourth year and, while some negotiations occurred earlier this year, there has been little publicized interaction in recent months.

By the Numbers

• $22 billion: Value of Lukoil's for-sale international assets
• 0.5%: Percentage of world oil production coming from those assets
• December 13: The start of U.S. Treasury department sanctions on Rosneft and Lukoil

Key Takeaways

• Trump administration pressure on Russia to return to bargaining table over Ukraine activity increases, prompting Lukoil to seek to sell its assets.
• International majors Exxon, Chevron, ADNOC are among those interested.
• Most only want selected assets, not the whole.
• India, China and Turkey have reduced imports.

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