US Decides To Probe Buyer Of Lukoil's Foreign Assets For Ties To Putin

Many in the industry were surprised by the speed with which the deal was announced.

U.S. authorities before approving the sale of Lukoil's foreign assets to oil trader Gunvor decided to look into the Swiss company's history of ties with Russian President Vladimir Putin, knowledgeable sources told Bloomberg. They said many in the industry were surprised by the speed with which the deal was announced - it came just a week after the U.S. imposed sanctions on Lukoil. At the same time, several major energy companies had time to contact Lukoil and offered to buy its assets abroad, but were turned down.

According to the agreement with Gunvor, the Russian company will transfer to the oil trader its Lukoil International subsidiary, which owns assets in 11 countries - from oil production facilities and refineries to networks of gas stations and trading units. The parties did not disclose the amount of the deal, but in 2023 the value of Lukoil International was estimated at about $21 billion, more than three times the value of Gunvor's equity. To finalize the deal, the Swiss oil trader needs to get approval from the U.S. Treasury Department, and its representatives are already negotiating, Bloomberg writes.

The agency notes that Gunvor has a reputation for maintaining constructive relations with the United States. In particular, it has previously complied with requirements aimed at reducing Moscow's oil revenues. However, if the company acquires Lukoil's foreign assets, it will turn out that the two largest deals in the life of the main owner and co-founder of Gunvor Torbjorn Tornqvist will be concluded because of U.S. sanctions. So, after the restrictions against Moscow were imposed in 2014, billionaire Gennady Timchenko sold his stake in the company. Then in the explanation to the sanctions, the U.S. Finance Ministry noted that Timchenko's activities in the energy sector are "directly linked to Putin" and the Russian president himself "has investments in Gunvor and may have access to the company's funds."

Tornqvist said that if the oil trader sells Lukoil's foreign assets to Lukoil, they will no longer return to the Russian company. He emphasized that the US authorities should have no objections to the deal as it would not benefit Russia. According to the co-founder of Gunvor, Lukoil's assets will help his company to strengthen its position in the global oil market through diversification. As Bloomberg notes, the deal will almost quadruple Gunvor's refining capacity, while its production capacity will increase from zero to about 440,000 barrels of oil and condensate.

Gunvor was founded in 2000 by Tornqvist and Timchenko. It almost immediately became the world's largest trader of Russian oil, and then became one of the three largest oil traders in the world. The company is currently 85% owned by Tornqvist, with the remainder owned by employees. The US has set a deadline for the sale of Lukoil's foreign assets until November 21. However, Tornqvist expects a six-month delay to finalize the deal.

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