Swiss oil trader Gunvor has withdrawn its offer to acquire the international assets of Russian company “Lukoil” — LUKOIL International GmbH — which were targeted by US and UK sanctions.
The change in plans to purchase Lukoil’s assets occurred after the US Treasury Department stated: “President Trump has made it clear that the war must end immediately. As long as Putin continues the senseless killings, the Kremlin’s puppet, Gunvor, will never be licensed to operate and profit.”
Gunvor’s statement regarding the matter reads: “The U.S. Treasury’s statement about Gunvor is fundamentally incorrect and false. Gunvor has always been open and transparent about its ownership and business and has actively distanced itself from Russia for more than a decade, ceasing trade in accordance with sanctions, divesting Russian assets, and publicly condemning the war in Ukraine. We welcome the opportunity to correct this clear misunderstanding. At the same time, Gunvor is withdrawing its offer to acquire Lukoil’s overseas assets.”
Under immense pressure, Lukoil must find a new buyer within days. Otherwise, its foreign assets risk being frozen or potentially nationalized in some jurisdictions after November 21.
NEWSROOM IN notes that the international energy group Gunvor Group was founded in 2000 by Swedish billionaire Torbjörn Törnqvist and Gennady Timchenko, a friend of Vladimir Putin. The company is registered in Cyprus and operates through main offices located in Geneva (Switzerland), Nassau (Bahamas), Singapore (Singapore), and Dubai (UAE). The company also has representative offices in other countries. Gunvor acts as one of the primary traders for several major Russian oil-producing companies.
Operational Paralysis for Lukoil & Gunvor issues
☛ Lukoil and 34 of its subsidiaries were added to US and UK sanctions lists. Restrictions on working with them are set to take effect on November 21.
☛ On October 30, Lukoil announced it had received an offer from Gunvor to acquire its foreign subsidiary. The sale was intended to be completed before the US sanctions came into force. One of the conditions for closing the deal was Gunvor obtaining approval from the US Treasury’s Office of Foreign Assets Control (OFAC).
☛ Following Gunvor’s announcement to withdraw its offer to buy Lukoil’s foreign business, the producer’s shares sharply declined.
Previously, Gunvor CEO Torbjörn Törnqvist told the Financial Times: “All of Lukoil’s international operations are paralyzed. No one can cooperate with them. Many jobs are at risk, and processing capacities could be severely disrupted.”
☛ In particular, the company encountered difficulties in Finland: Finnish banks began blocking payments to its subsidiary petrol station network, Teboil, forcing them to switch to cash transactions.
☛ The Iraqi state-owned company SOMO canceled the shipment of three batches of oil produced by Lukoil at the West Qurna-2 field due to concerns related to US and UK sanctions. Lukoil holds a 75% stake.
☛ Lukoil’s trading arm in Switzerland — Litasco — began experiencing difficulties with chartering vessels. Shipping brokers are refusing to work with the company.
☛ Bulgarian President Rumen Radev vetoed a law regulating the sale of Lukoil’s assets (including the Burgas refinery), but the country’s parliament overrode his veto. According to parliamentarians, Radev’s decision could potentially simplify the transfer of assets to Russia-linked entities, while simultaneously creating legal confusion regarding the future of one of Europe’s largest assets.
