The sale of Lukoil's foreign assets may take up to a year

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to the TASS news agency on the prospects for the forced sale of LUKOIL's foreign assets.

"You can try to sell something quickly before November 21, but it looks doubtful, and you can only do it at a very large discount. It is unlikely that the company will do this," Alexei Belogoryev told. According to his estimates, the sale of controlled assets will take many months. "I think that six months or a year is a realistic deadline for closing the deal," the expert believes.

He added that it was most likely not about the sale of all Lukoil's assets.

"Now for the company it is more important to remove everything from the direct impact of sanctions, those subsidiaries where Lukoil has 50% or more, where there is control. This is a very limited list. These are primarily two refineries in Romania and Bulgaria, and some producing assets in Iraq, Egypt and Mexico. Plus, there is also a network of gas stations in the northeastern region of the United States. These assets will have to be sold or the share of participation will have to be drastically reduced, if possible," the expert noted.

According to him, the Dutch authorities are likely to seek the sale of 45% of Lukoil's stake in the Zeeland refinery. As for the remaining assets, where the Russian company has minority shares, there are no direct obligations to sell, but other shareholders and project operators may insist on this.

The issue price

According to Belogoryev, Lukoil's assets are mostly profitable and attractive, but selling under pressure and on short notice will require high discounts.

The expert believes that the most likely buyers of refineries will be vertically integrated companies that have their own production.

"One of the likely contenders is Kazmunaigas. Most likely, there will not be a single buyer for all assets. These are completely different countries, conditions, and different types of business - from gas stations to exploration," Belogoryev added.

He also did not rule out an interim sale of the asset to any non-sanctioned, possibly even Russian, company located in another jurisdiction, but noted the high risk of subsequent sanctions from the US Treasury Department on such a company.