Lukoil fully writes off investment in Lukoil International, reports impairment loss of 1.66 trillion rubles
MOSCOW. March 20 (Interfax) - Lukoil has fully written off its investment in Lukoil International GmbH and has reported an impairment loss of 1.66 trillion rubles, the company said in its 2025 report.
The oil company reflected the results of its international assets as the results of discontinued operations.
The LIG Group, as well as a number of other foreign companies, were deconsolidated from PJSC Lukoil's financial reporting as of November 21, 2025.
The United States hit Lukoil with sanctions on October 22, 2025, allowing one month, until November 21, to complete operations with the oil company and subsidiaries where Lukoil owns 50% or more. Following these restrictions, the company said it intended to sell its overseas assets. The United States Treasury Department's Office of Foreign Assets Control (OFAC) issued a license allowing transactions related to sale negotiations, disposal or transfer of LIG and its assets, while prohibiting the transfer of funds to persons in the Russian Federation or to Russian accounts. Initially, this license was valid until December 13, 2025, but it was subsequently extended several times and is now valid until April 1, 2026.
The restrictions resulted in PJSC Lukoil losing control over the LIG group, as well as a number of other overseas companies since November 21, 2025, because it was unable to manage these assets and conduct business as usual. "The investor loses control over the investment asset (subsidiary) when they no longer possess a mandate to manage the material business of the investment asset or when no longer exposed to the risk of variable income," the report says. In accordance with the restrictions and OFAC license, the company retains ownership of overseas assets for the purpose of their sale, disposal or transfer, but no longer has control or leverage in business management within the LIG group. Since November 21, 2025, the company has not had direct relations with the directors (executive bodies) of LIG companies, or information about decisions made within this group, cash flow, balances and status of bank accounts, settlements with counterparties, and any financial information. In addition, no funds have been transferred from LIG in favor of the Lukoil Group's Russian entities November 21, 2025.
The company cannot assess the potential results of the sale, disposal or transfer of investment to LIG, since the result depends entirely on the decision by OFAC, which may or may not approve a sale, or terminate the license before it expires, Lukoil said. Also, if sale of overseas assets is approved, proceeds will likely be credited to a special account, from which they cannot be withdrawn until sanctions are lifted. "Due to the high degree of uncertainty over when restrictions are lifted and sale proceeds received, management valued the investment in LIG capital, which no longer carries control, at approximately zero. However actual events and results of the next fiscal year, in particular, decisions by OFAC or the sale of LIG, could result in some of the value of the written-off investments being restored," Lukoil said.
Investment was fully written off after control over LIG was lost.
Lukoil announced plans to sell its international assets after it was hit by U.S. and UK sanctions. The company received and accepted an offer to buy its international arm from commodities trader Gunvor. However, the U.S. Treasury Department refused to approve the sale to Gunvor. Lukoil said in late January that it had reached an agreement to sell Lukoil International GmbH to U.S. investment company Carlyle Group. The deal awaits OFAC approval.
The UK has authorized transactions with Lukoil's international assets until August 25, 2026.
Lukoil is involved in projects in Azerbaijan, Kazakhstan, Uzbekistan, Iraq, Egypt, Cameroon, Nigeria, Ghana, Mexico, the United Arab Emirates and Republic of the Congo, and has oil refineries in Bulgaria, Romania and the Netherlands. The company also has about 2,500 filling stations in 19 countries. The proven oil and gas reserves of Lukoil's international projects totaled 1.345 trillion barrels of oil equivalent at the end of 2024. The company's international projects, not including West Qurna 2 in Iraq, produced 3.9 million tonnes of oil and gas condensate and 16.2 billion cubic meters of gas in 2024. Crude processing at the group's European oil refineries fell 18% to 13.5 million tonnes in 2024 due to the sale of the ISAB refinery in Italy in May 2023. Retail sales of oil products abroad totaled 4.2 million tonnes in 2024.
A number of Lukoil's international projects were granted exemptions from the UK and U.S. sanctions, including the development of the Tengiz and Karachaganak fields in Kazakhstan and the Caspian Pipeline Consortium (CPC).
