Lukoil to sell overseas assets after US sanctions tighten grip on Russia's oil industry

Moscow-headquartered oil major Lukoil announced on Monday that it will start selling its international assets following sanctions imposed by the United States.

Lukoil, Russia’s second-largest oil producer, also said it has started considering bids from potential purchasers. The asset sales will be carried out under the wind-down license issued by the US OFAC (Office of Foreign Assets Control).

According to Lukoil, the move is a direct response to the “introduction of restrictive measures against the Company and its subsidiaries by some states,” ANI reported.

The US imposed sanctions on Russian oil firms on 22 October, specifically targeting two of Russia's largest oil producers — Rosneft and Lukoil. This decision marked the first major measure against Russia since US President Donald Trump returned to office.

Deadline to wind down business

OFAC has set a 21 November deadline for Lukoil to wind down its businesses abroad or face “hefty penalties.”

The company said it is prepared to seek an extension of the license to ensure the “uninterrupted operations of its international assets.”

US President Donald Trump imposed sanctions on Lukoil, along with oil and gas firm Rosneft, saying that it was “a result of Russia's lack of serious commitment to a peace process to end the war in Ukraine.”

Washington also gave any firms working with the sanctioned Russia entities one month to cut ties or face secondary sanctions, which include denial of access to the US banks, traders, shippers and insurers, ANI reported.

Why were sanctions imposed on the US?

The US Treasury Department said it aims to “increase pressure on Russia's energy sector and degrade the Kremlin's ability to raise revenue for its war machine and support its weakened economy.”

“The United States will continue to advocate for a peaceful resolution to the war, and a permanent peace depends entirely on Russia's willingness to negotiate in good faith. Treasury will continue to use its authorities in support of a peace process,” the US Treasury's statement read.

US Secretary of the Treasury Scott Bessent said “now is the time to stop the killing,” and called for an “immediate ceasefire”.

He said, “Given President Putin's refusal to end this senseless war, Treasury is sanctioning Russia's two largest oil companies that fund the Kremlin's war machine. Treasury is prepared to take further action if necessary to support President Trump's effort to end yet another war. We encourage our allies to join us in and adhere to these sanctions.”

The oil major Lukoil engages in the exploration, production, refining, marketing, and distribution of oil and gas in Russia and across the world.

Subsidiaries of the company

The US Treasury Department has also sanctioned several Russia-based Lukoil subsidiaries under EO 14024 for operating in the energy sector of the Russian Federation economy. The subsidiaries include:

— Limited Liability Company Lukoil Perm: Involved in geological exploration and oil and gas production in Russia.

— Lukoil West Siberia Limited: Involved in oil and gas production in Russia.

— Lukoil Kaliningradmorneft: The firm develops onshore and offshore oil and gas fields in Russia and is involved in oil and gas production in Russia.

— Lukoil subsidiary Russian Innovation Fuel and Energy: Involved in the development, production, testing, and implementation of new technologies, techniques, and equipment for the development of hydrocarbon reserves and enhanced oil recovery in Russia.

— Lukoil subsidiary Uraloil: The firm develops oil and gas fields in Russia.