After Gunvor's withdrawal from the deal, Lukoil may sell its foreign assets in parts, most easily to existing partners in individual projects, experts interviewed by TASS believe. They estimate their real value at approximately $12 billion, but do not rule out the possibility that, in the event of a quick deal, the assets could be sold at a significant discount.
Now it will be more profitable for Lukoil to sell the assets in bulk and there is no need to rush the deal, noted Kirill Bakhtin, head of the Center for Russian Equities at BCS World of Investments. “Lukoil is currently losing its sense of urgency: it is essentially impossible to sell any asset at an acceptable price before November 21, especially given the buyer's desire to protect itself from additional risks and, in connection with this, to obtain approval for the purchase from the Ministry of US finances. Foreign assets have different values and synergies for different potential buyers, so for Lukoil, a sale in parts at the highest price is possible“, he said.
According to the expert, the simplest implementation scenario for Lukoil would be to sell the assets to its current partners in these projects. “I think the deal could be split into parts and the company could sell the assets separately“, agrees Stanislav Mitrahovich, a leading expert at the National Energy Security Fund and a research fellow at the Financial University.
Meanwhile, according to Sergey Kaufman, an analyst at FG Finam, if the US refuses to renew the license to cease operations with the company after November 21, the risk of some of Lukoil's assets being placed under external management increases.
Finam estimates the real value of Lukoil's international projects at $12 billion. “However, finding buyers for all the assets at once in a very short period of time can be quite difficult, especially given the risk that the US Treasury will block the deal again. In such a situation, if a buyer is found, the discount, in our opinion, could already exceed 50%“, he noted.
The assets are of interest to the market, Kaufman added. “Regardless of the impact of sanctions, the assets of the Russian oil company are undoubtedly attractive targets for acquisition by a wide range of buyers: large oil and gas companies, oil traders, national oil and gas companies and investment funds“, he said. Mitrahovich did not rule out the possibility that the company would have to agree to additional discounts. “Discount - yes, I think we will have to offer additional“, he noted.
For his part, Bakhtin described the situation with the discount on the assets as unclear and believes that the deal could take at least several months. “On the one hand, there were no pre-agreed key terms, as in the case of Gunvor, and on the other hand, there is no urgency to sell. Discussion of the discount is not necessary for now – the market does not know what the discount would be in the Gunvor scenario“, he said. According to the expert, Lukoil's main consolidated foreign assets in Bulgaria, Romania and Iraq are estimated at approximately 8% of Lukoil's EBITDA, but their sale, provided that the buyer conducts a full due diligence process, could take at least several months.
In October, the US and UK added Lukoil to their sanctions lists. Subsequently, Lukoil announced its intention to sell its international assets and received an offer from Gunvor to acquire Lukoil International GmbH, which owns the Russian company's foreign assets. Gunvor then announced that it had withdrawn its offer to purchase Lukoil's foreign assets following a statement from the Ministry of the US Treasury, which states that it will not issue Gunvor a license to operate and generate profits until the conflict in Ukraine is resolved.
Lukoil has implemented numerous international projects: the company owns two refineries in Europe (in Romania and Bulgaria), as well as a stake in a refinery in the Netherlands. By the end of 2024, Lukoil operates an extensive network of gas stations in 20 countries, 2,456 of which are located abroad (including in the US and Europe). The company also operates in Azerbaijan, Kazakhstan, Uzbekistan, Iraq, the United Arab Emirates, Egypt, Cameroon, Nigeria, Ghana, the Republic of Congo and Mexico.