US and UK sanctions cripple overseas operations of Russian oil giant Lukoil

Russian oil giant Lukoil, which was recently sanctioned by the United States and the United Kingdom along with Rosneft, is facing serious disruptions in its operations abroad, including in Iraq, Finland and Switzerland.

Source: Reuters, citing sources

Details: The sources said Iraq's state oil company Somo had cancelled three shipments of crude produced by Lukoil as part of its stake in the West Qurna-2 oilfield, citing concerns over Western sanctions. Lukoil owns a 75% stake in the oilfield, which has a capacity of 480,000 barrels per day, with the remaining share belonging to Iraq's North Oil Company.

Lukoil's trading arm Litasco (based in Geneva, Switzerland) is struggling to charter tankers, as British ship brokers have refused to cooperate with the company. Litasco has already cut staff amid the sanctions.

In Finland, where Lukoil owns the Teboil petrol station network, banks have stopped servicing its operations, leaving around 1,000 employees and fuel station operators at risk of losing their jobs in the coming weeks.

"Lukoil's whole international operations are paralysed," Torbjörn Törnqvist, CEO of the trading firm Gunvor, told the Financial Times. Gunvor is planning to purchase Lukoil's foreign assets.

"Nobody can transact with them. A lot of jobs are at stake and the refining capacity could be very disrupted," Törnqvist added.

As reported by The Moscow Times, Lukoil's foreign "oil empire" includes refineries in Bulgaria, Romania and the Netherlands, a petrol station network across the European Union, and extraction projects in Azerbaijan, Kazakhstan, Uzbekistan, Iraq, Egypt, the UAE, Latin America and parts of West and Central Africa.

Background: The sanctioned Russian oil producer Lukoil has agreed to sell its international assets to the Gunvor Group energy trading company.

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