Moscow-headquartered energy giant PJSC Lukoil has said yes to a bid from Switzerland’s Gunvor Group for its international portfolio of assets in the wake of growing global sanctions, which keep tightening their hold on Russian businesses overseas and those with ties to them.
Just days after Lukoil disclosed its intention to sell its international assets as a result of the introduction of restrictive measures against the company and its subsidiaries by some states due to Western sanctions, kicking off the consideration of bids from potential buyers, the firm confirmed the receipt of an offer from Gunvor Group.
Having decided not to negotiate with other potential buyers, the Russian giant has accepted this offer from the Swiss player for Lukoil International, the company’s 100% subsidiary, which owns its international assets.
The firm reiterated that the restrictive measures it is facing in some regions of the globe are behind this divestment. The reach of sanctions introduced against Russia’s energy realm is confirmed by Borr Drilling’s recent termination of two long-term rig assignments offshore Mexico.
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The U.S. Office of Foreign Assets Control (OFAC) has issued a wind-down license, which enables the energy titan to continue operations temporarily while facilitating the sale of its assets. However, the company could seek an extension of this license to ensure business continues as usual during the divestment process.
With the key terms of the transaction already ironed out, Lukoil’s conclusion of the binding agreement for the sale of its international business is subject to conditions precedent, including obtaining OFAC permission by the buyer as well as any other applicable licenses, permits, and other authorizations in other relevant jurisdictions.
Should it become necessary, the two players plan to apply for an extension of the existing OFAC license and any additional licenses to ensure uninterrupted operations of international assets and their banking servicing for the period until the completion of the transaction.
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Lukoil’s divestment move comes months after its subsidiary signed off on a deal with OMV to sell its stake in a giant sour gas development off the coast of the United Arab Emirates (UAE).