Lukoil Pursues Overseas Asset Sales Under US Sanctions
The New York Times reported on the 3rd (local time) that US envoys discussed a deal to sell Russian oil company Lukoil's overseas assets in Moscow last month. According to the NYT, at the Kremlin meeting on the 5th of last month, Russian President Vladimir Putin asked Jared Kushner and Steve Witkoff, envoys of US President Donald Trump, to help secure the sale of Lukoil's overseas assets. The meeting was originally arranged to discuss the possibility of a ceasefire in the Ukraine war. The two envoys replied that they would push for it, arguing it could build goodwill with Russia and help lower global energy prices.
Lukoil is Russia's largest private oil company by revenue. After being placed under US and European sanctions last October, the company has sought to sell its overseas assets and has approached potential investors, but the deals have repeatedly fallen through. Its overseas assets include gas stations in the United States, refineries in Eastern Europe, and oil fields around the world. Because sanctions have made these assets nearly worthless to investors inside Russia, they were put up for sale at fire-sale prices.
The group of investors currently pursuing the acquisition is led by billionaire asset manager Todd Boehly, a co-owner of Major League Baseball's Los Angeles Dodgers. Last December, as negotiations got underway in earnest, he donated $1 million (about 1.34 billion won) to MAGA Inc., a political action committee supporting President Trump. Among the investors partnering with Boehly is International Holding Company (IHC), a major Emirati investment firm chaired by Sheikh Tahnoon bin Zayed Al Nahyan. Organizations separately operated by Sheikh Tahnoon hold roughly half of the shares in World Liberty Financial, the cryptocurrency company founded by members of the Trump and Witkoff families. According to the NYT, a significant number of key figures in the acquisition group have multifaceted business ties with Trump's children, the Witkoff family, and envoy Kushner.
Lukoil's attempts to sell its overseas assets are known to have collapsed or stalled at least twice. Completing the deal would require approval from both the Russian and US governments. In late October last year, the Swiss firm Gunvor announced it had reached an agreement to acquire Lukoil, but in early November it withdrew its bid after facing public opposition from the US Treasury Department. In January this year, there were also reports of a preliminary, non-exclusive agreement for Lukoil to sell some of its overseas assets to the US investment firm Carlyle, but the process reportedly stalled as approval procedures failed to move forward.
If the Boehly-led deal is approved, Carlyle, which has been competing for the acquisition, will lose out. If Carlyle's proposal were adopted instead, the assets would be owned entirely by American interests, and the NYT reported that Carlyle, unlike Boehly's group, has no similar financial ties to the president's family or political advisers.
