Lukoil to Sell $22 Billion in Foreign Assets to Carlyle Group

Lukoil's International Asset Sale Overview

By Vladimir Soldatkin and Olesya Astakhova

Details of the Sale

MOSCOW, Jan 29 (Reuters) - Lukoil had agreed to sell most of its foreign assets, estimated to be worth around $22 billion, to U.S. private equity firm Carlyle Group pending approval from the U.S. government, Russia's No. 2 oil producer said on Thursday.

Regulatory and Due Diligence Requirements

Under U.S. sanctions because of Russia's actions in Ukraine, the U.S. Treasury had given Lukoil until February 28 to sell its global portfolio.

Impact of U.S. Sanctions

The sale, if it goes through, would end the foreign expansion of Lukoil, which is the Russian company most heavily exposed to international energy markets.

Lukoil said in a statement it had agreed with Carlyle to sell its unit LUKOIL International GmbH, which oversees the company's foreign assets.

These include operations in Europe, the Middle East, Africa, Central Asia, and Mexico, and range from a controlling stake in Iraq's sprawling West Qurna 2 oilfield to refineries in Bulgaria and Romania.

"The agreement signed is not exclusive for the Company and is subject to some conditions precedent such as procurement of necessary regulatory approvals including permission of the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) for the transaction with Carlyle," Lukoil said.

Carlyle said in a statement that the deal was conditional upon its due diligence and regulatory approvals.

SANCTIONS PRESSURE

Lukoil and Russia's largest oil producer Rosneft were sanctioned by the U.S. last October for what Washington said was slow progress in peace talks between Russia and Ukraine.

The sanctions are part of a push by U.S. President Donald Trump to force Russia to agree on a deal to end the conflict in Ukraine, the deadliest European war since World War Two.

Various sources have said that at least a dozen potential suitors had expressed interest in buying Lukoil assets, including Carlyle, U.S. oil majors Exxon Mobil and Chevron, Abu Dhabi conglomerate IHC, and Saudi Arabia's Midad Energy.

Carlyle manages $474 billion in assets, spanning three business segments and 660 investment vehicles.

Lukoil said the deal did not include its assets in Kazakhstan.

Kazakhstan said on Wednesday it had submitted a formal bid to the U.S. authorities to acquire Lukoil's stakes in the country's energy projects.

The stakes include Caspian Pipeline Consortium, the main gateway for Kazakh oil exports, as well as the country's largest oilfield, Tengiz.

The U.S. Treasury has so far blocked two attempts to buy Lukoil's assets, first a deal between Lukoil and Swiss trading group Gunvor in October, and then a proposed share swap engineered by Xtellus Partners, the former U.S. arm of Russian bank VTB, in December.

(Reporting by Vladimir Soldatkin and Olesya Astakhova; Editing by Guy Faulconbridge, Andrew Osborn and Tomasz Janowski)