US torpedoes Lukoil’s deal to sell its overseas business to Gunvor

The United States Department of the Treasury said it wouldn’t allow Gunvor to “operate and profit,” calling it “the Kremlin’s puppet.” The energy trader responded that the statement is “fundamentally misinformed and false,” but it withdrew its proposal for Lukoil’s international assets.

For a minute it seemed that a potential fuel crisis in Europe – especially in the southeast – was going to be prevented. Russian oil company Lukoil, which came under US sanctions, agreed late last month to sell its foreign assets to Gunvor Group. The proposed transaction could have become a model for the resolution of sanctions against Serbia-based NIS, which operates the country’s only refinery and the largest chain of service stations.

A comprehensive reshuffling of Russian energy business in Europe apparently depends on peace negotiations for Ukraine with the administration of President Donald Trump. Amid a lack of progress, it scuttled the acquisition.

“President Trump has been clear that the war must end immediately. As long as Putin continues the senseless killings, the Kremlin’s puppet, Gunvor, will never get a license to operate and profit,” the Treasury Department said.

Gunvor scraps Lukoil deal after US threat

Gunvor, one of the largest energy traders in the world, is registered in Cyprus. The company, which operates out of Geneva and several other offices, gave up on the deal.

“The Treasury Department statement about Gunvor is fundamentally misinformed and false. Gunvor is and has always been open and transparent about its ownership and business, and has for more than a decade actively distanced itself from Russia, stopped trading in line with sanctions, sold off Russian assets, and publicly condemned the war in Ukraine. We welcome the opportunity to ensure this clear misunderstanding is corrected. In the meantime, Gunvor withdraws its proposal for Lukoil’s international assets,” the firm said.

Swedish billionaire Torbjörn Törnqvist, Gunvor’s CEO, owns a 85% share

Chief executive officer Torbjörn Törnqvist, a Swedish billionaire, owns 85% of the company. He co-founded it in 2000 with Russian businessman Gennady Timchenko, who sold his stake to his partner in 2014 after coming under US sanctions himself.

Russia reacted to the US Treasury Department’s new accusations by calling the trade restrictions illegal.

Refinery in Romania not attractive for purchase

Lukoil’s facilities up for sale include the largest oil refinery in the Balkans – Lukoil Neftohim Burgas in Bulgaria, as well as the Petrotel-Lukoil refinery in Romania. The Russian company also has fuel retail networks in Romania, Bulgaria, Turkey, North Macedonia, Croatia, Serbia, and Montenegro.

Notably, the refinery in Romania doesn’t seem to be attractive for possible buyers, Profit.ro reported. It is designed for processing the Russian Ural type of oil, rich in sulfur. Adaptation to sweeter crude would require major investments, maybe bigger than for an entirely new refinery, according to the article.

A crucial factor as well is that Lukoil’s businesses abroad were worth an estimated USD 22 billion in 2023, over three times more than Gunvor.