Carlyle Eyes Lukoil's Foreign Assets

(Credit: Lukoil)

U.S. private equity firm Carlyle is exploring options to buy Russian oil major Lukoil's LKOH.MM foreign assets, three sources familiar with the situation said.

The U.S. has hit Lukoil with sanctions as part of its effort to bring the Kremlin to peace talks over Ukraine, and has blocked Lukoil's attempt to sell assets to Swiss-based trader Gunvor ahead of the November 21 sanctions deadline.

Lukoil extracts about 2% of global oil output at home and abroad, and has said it is seeking buyers for its international assets, which produce 0.5% of global oil and are estimated to be worth about $22 billion, based on 2024 filings.

Carlyle is in the early stages of exploring a purchase of the assets, one of the sources said.

Reuters was the first to report Carlyle's interest. It is looking to apply for a U.S. licence allowing it to buy the assets before beginning due diligence, the source said, adding that it could still decide to walk away.

Carlyle has made Lukoil aware of its intentions, a second source said.

Carlyle declined to comment. Lukoil did not respond to a request for comment.

Better Fit

Gunvor ended its pursuit of the Lukoil foreign assets after the U.S. Treasury expressed its intent to block the deal and called the Swiss commodities trader a Kremlin "puppet."

"Carlyle is better suited to get U.S. approval," said Adi Imsirovic, director of consultancy Surrey Clean Energy, and former oil trading head at Russia's Gazprom trading arm.

The U.S. Treasury has set a November 21 deadline after which deals with the Russian company will be prohibited. Lukoil has applied for an extension, Reuters reported on Wednesday.

"The opportunity set here is that Carlyle can get a bargain, but can they get the time to properly assess the value of the assets?" said Dan Pickering, chief investment officer at Pickering Energy Partners.

Efforts by some countries to nationalize some assets added complexity to a potential deal, said Aditya Ravi, head of upstream research at Rystad Energy.

Global Assets

For decades, Lukoil has been Russia's most active oil major abroad, helping Moscow project soft economic power overseas.

Lukoil has three refineries in Europe, stakes in oilfields in Kazakhstan, Uzbekistan, Iraq, Mexico, Ghana, Egypt and Nigeria, and hundreds of retail fuel stations around the world, including in the United States.

The latest U.S. sanctions have also disrupted Lukoil's operations in Iraq, Finland and Bulgaria.

Carlyle, one of the world's biggest private equity, alternative asset management and financial services firms, has $474 billion of assets under management.

(Reuters- Reporting by Dmitry Zhdannikov and Shariq KhanEditing by Mark Potter, Rod Nickel)