Snowball: how Lukoil and Rosneft are trying to avoid European nationalization

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, commented to the Forbes business publication on the possible fate of Lukoil and Rosneft's foreign assets after their inclusion in the US sanctions lists, as well as on the prospects for Russian oil exports.

Based on the letter of the US sanctions, assets where Lukoil's share exceeds 50% fall under them, Alexey Gromov says.

"But the parent company also falls under sanctions, the subsidiaries will not be able to make payments and transactions with it in US dollars, and participation in all foreign assets will have to be reviewed," the expert adds.

Rosneft participates in a number of oil and gas production projects outside Russia, but its share in them is less than 50%. The company's largest asset is a 49.13% stake in India's Nayara Energy.

"The Indian market will be reformatted as a result of the sanctions, it is important not only that Nayara Energy has been sanctioned. All petroleum products produced from Russian oil will not be accepted by the EU from January 2026," Gromov notes.

Nayara will have to sell them either in the Indian market or in other countries. And there are a number of logistical and trade issues that the company is starting to address, he says.

After Chinese state-owned enterprises suspended operations and the conclusion of new contracts with Lukoil and Rosneft, a number of media outlets decided that China was refusing to purchase Russian oil from sanctioned companies, Gromov notes.

"Actually, that's not quite true. State-owned companies are guided by management directives and, accordingly, will act exactly as they are instructed from above. In the meantime, government agencies are working out a position on how to further interact with Russia. And given that China needs Russian oil, I am more than confident that channels for purchasing Russian oil from sub—sanctioned projects or from sub-sanctioned companies will be formed on terms that will suit both Russia and China," the expert says.

But, he adds, Russian supplies to China will decrease by the end of the year, as the country's oil reserves are full, and Beijing can afford to reduce imports, and many private refineries have already exhausted their import quotas for this year.

Gromov believes that Indian companies, including Nayara Energy, will continue to purchase Russian oil.

It should not be forgotten that refineries in the world earn an average of $3-4 per barrel of refined oil, while Indian refiners of Russian oil earn $8-9, the expert says.

"If we provide an additional discount, this figure may exceed $10 per barrel,- Gromov notes. "This is a very high margin level, and I think India is unlikely to abandon it."