Ukraine war briefing: Fire sale of Lukoil assets before start of US sanctions on Russia

The foreign oil refineries and other assets of Russian company Lukoil are attracting potential buyers as time runs out to strike cheap deals before US sanctions come into force on 21 November. The sanctions, put in place in response to Russia’s war on Ukraine, have already disrupted Lukoil’s operations in Iraq, at pump stations in Finland and a refinery in Bulgaria. Kazakhstan’s state firm KazMunayGas is studying a bid for Lukoil’s assets in the country, two sources familiar with the matter told Reuters. Shell is interested in Lukoil deepwater assets in Ghana and Nigeria, two other sources said. Shell declined to comment to Reuters.

The government of Moldova has started talks to nationalise Lukoil’s infrastructure at Chisinau airport, said the airport’s director, Serdgiu Spoiala. Bulgaria is working towards seizing and reselling Lukoil’s Burgas refinery, although Bulgaria’s president, Rumen Radev, has sent the legislation back to parliament asking for legal changes. In Egypt, Lukoil has indicated to the government its possible plans to sell out, a Reuters source familiar with the situation said. Lukoil holds three concessions in Egypt. Egypt’s petroleum ministry did not respond to a Reuters request for comment.

Lukoil faces either selling its assets and having the proceeds potentially seized, or their takeover by foreign states if it does not sell them, said Sergey Vakulenko, a senior fellow at the Carnegie Russia Eurasia Center and former head of strategy at Russian oil firm Gazprom Neft. Lukoil may try to emulate Russian oil firm Rosneft whose three German refineries were put under a trusteeship in 2022 – controlled by Berlin but still owned by Rosneft. Lukoil’s attempt to sell foreign assets to the Swiss-based oil trader Gunvor was scrapped after opposition from the US treasury which called Gunvor the Kremlin’s “puppet”.

The Russian army overran three settlements in the Zaporizhzhia region of southern Ukraine, Kyiv’s top military commander, Gen Oleksandr Syrskyi, said on Wednesday. Dense fog enabled Russian troops to infiltrate Ukrainian positions, he continued, adding that Ukrainian units were locked in “gruelling battles” to repel the Russian thrust. The fiercest battles remained in the besieged Ukrainian city of Pokrovsk, in the Donetsk region, where close to half of all frontline clashes took place over the previous 24 hours. There was increased fighting also in the cities of Kupiansk and Lyman in Ukraine’s north-eastern Kharkiv region.

At Huliaipole, a Zaporizhzhia settlement where Syrskyi said the situation had worsened significantly, Reuters interviewed 84-year-old Polina Plyushchii as she sat bundled in layers of clothing and clutching her cane inside an evacuation van. Deadly threats including drones had made life too dangerous, she said. “You’re in your own house, your own yard – and you can’t go out,” she said, as Ukrainian rescuers race to get remaining civilians out of the line of fire. “There’s nowhere to buy medicine, there’s no water,” said evacuee Zhanna Puzanova, 55, adding both she and her 88-year-old mother were in poor health. “We can’t live like that any longer.”

Vitaly Klitschko, the Kyiv mayor, has called for Ukraine to boost its fighting numbers by lowering the age of conscription. “In the past, 18-year-olds served in the army – but those are kids,” he said. “Right now you can only be mobilised in Ukraine from age 25. You could lower it by a year or two – to 23 or 22.” Klitschko spoke to a media network that includes Politico.

The EU foreign policy chief, Kaja Kallas, said an energy corruption scandal in Ukraine was “extremely unfortunate” and it was important that Kyiv take it seriously. Luke Harding reports that Volodymyr Zelenskyy has moved to contain growing public outrage by firing two ministers who are accused of involvement in a large-scale bribery scheme. Ukraine’s president said the justice minister Herman Halushchenko and the energy minister Svitlana Grynchuk could no longer remain in their jobs.

Ukraine’s president also called for personal sanctions against his friend and former business partner Timur Mindich, the scheme’s alleged organiser. “There must be maximum integrity in the energy sector, in absolutely all processes. I support every investigation carried out by law enforcement and anti-corruption officials. This is an absolutely clear and consistent position for everyone.” Mindich reportedly fled abroad, possibly to Israel, in the hours before investigators arrived at his Kyiv apartment to carry out a search. He was previously close to Zelenskyy, although sources say they have had little contact since Russia’s full-scale invasion.