Sanctions Impact | Full Impairment of Lukoil’s Overseas Assets under U.S. Sanctions

On October 15, 2025, the United Kingdom took the lead in imposing stringent sanctions on Russia’s energy sector, designating 11 entities—including Rosneft and Lukoil—on the grounds that they support operations in Russia’s energy sector. Among those designated were five Chinese entities: Shandong Yulong Petrochemical Co., Ltd.; Shandong Jinguo Co., Ltd.; Shandong Hisense Co., Ltd.; Shandong Baogang International Port Co., Ltd.; and China National Pipeline Network Group Beihai LNG Co., Ltd. Additionally, 44 Russian LNG tankers were added to the sanctions list. On October 22, 2025, the United States implemented its first sanctions against Russia since February of this year, adding Russia’s two largest oil companies—Rosneft and Lukoil—and their 34 subsidiaries to the Specially Designated Nationals (SDN) List. This move aims to intensify pressure on Russia’s energy sector and weaken the Kremlin’s ability to raise funds and sustain its economy. Simultaneously, the U.S. issued four general licenses, including one authorizing a phased termination of transactions with the designated entities through November 21, 2025, and another permitting certain oil-related services and transactions involving the Caspian Pipeline Consortium and the Tengizchevroil project. Under the 50% rule, any subsidiary in which Lukoil holds, directly or indirectly, 50% or more equity is automatically subject to sanctions. In this round, 34 key subsidiaries were explicitly named, including: ・ Lukoil Perm (geological exploration) ・ Lukoil-Western Siberia (oil and gas in Western Siberia) ・ Lukoil Overseas (overseas projects) ・ Litasco S.A. (Switzerland-based global crude trading platform) ・ Litasco Middle East DMCC (Dubai-based trading subsidiary) ・ plus 29 other subsidiaries engaged in refining, marketing, transportation, and related activities across Russia and abroad. Concurrently, the European Union adopted its 19th package of sanctions against Russia—but stopped short of imposing a comprehensive transaction ban on Lukoil. On October 23, 2025, the Council of the EU formally adopted the 19th sanctions package, imposing restrictive measures on 69 individuals and multiple economic sectors, including Russia’s energy, banking, and cryptocurrency exchange industries—as well as relevant Chinese entities. Energy-related measures include: First, a ban on imports of Russian liquefied natural gas (LNG): long-term contracts will be prohibited starting January 2027, while short-term contracts must cease within six months; Second, a comprehensive transaction ban targeting Rosneft and GazpromNeft; Third, sanctions on third-country entities—including two Chinese refineries and two Chinese petroleum traders—accused of generating revenue for Russia: Liaoyang Petrochemical, Shandong Yulong Petrochemical, PetroChina (Hong Kong) Limited, and Tianjin Xishan Fusheng International Trading Co., Ltd.; Fourth, the addition of 117 vessels to the list of sanctioned ‘shadow fleet’ ships, along with transaction bans targeting Lukoil-affiliated shadow-fleet enablers—including Litasco Middle East DMCC—and maritime registration agencies providing false flag services. To date, the total number of designated vessels in Russia’s ‘shadow fleet’ has reached 557.

Is the United States launching an ‘oil war’ against China?

On Venezuela’s oil issue, even Trump extended an olive branch to China, stating that oil sales to China could continue—but with the implicit understanding that such trade would proceed only after U.S. companies assume control. U.S. Energy Secretary Chris Wright stated: “The recently proposed management structure will place the United States in charge of selling sanctioned Venezuelan oil at market prices—and ensure that proceeds benefit the Venezuelan people.” This statement contains two key phrases: “U.S. in charge” and “market price.” Yet industry analysts widely expect that—even if all sanctions on Venezuela are fully lifted—its importance as an oil supplier to China will diminish. Once remaining loans are repaid, China is unlikely to resume oil imports from Venezuela. In 2009, Hugo Chávez visited China. That year, Venezuela’s per capita GDP stood at $11,600, while China’s was $3,566. Trump’s ‘Western Hemisphere First’ doctrine—and his blockade of Venezuelan oil exports—undoubtedly impact China’s Latin American strategy. Specifically, China will reassess its dependence on Latin America in energy, food, and critical minerals, and exercise caution before offering any strategically sensitive resources or technologies to Latin American governments. One implicit message behind the potential military strike on Venezuela is dissatisfaction with left-wing, anti-U.S., and pro-China stances held by several Latin American countries. The United States is increasingly overt in its intervention in Latin American affairs—employing a hybrid mix of military, intelligence, media, and tariff tools—and resorting to coercive force to compensate for diplomatic failures. Brazil’s presidential election is scheduled for October 2026. At age 81, incumbent President Lula has announced his bid for a fourth term. His likely opponent may be the son of former President Jair Bolsonaro. Bolsonaro served as Brazil’s president from January 2019 to January 2023. His political style and stance closely mirror Trump’s—and the two leaders share deep mutual admiration and unwavering loyalty. It is therefore foreseeable that Trump—renowned for his sense of loyalty—will intervene vigorously in Brazil’s election, determined to flip Latin America’s largest country in one decisive move. A cause for concern is that, within just one year of Trump’s return to office, Latin America has already shown signs of a broad ‘rightward shift’: Argentine President Javier Milei won midterm elections; Chile elected an extreme-right president; and Peru’s leftist president was impeached and removed from office. Many formerly dominant center-left political figures across Latin America are now being decisively defeated by their rivals. Trump’s first term and Bolsonaro’s presidency. If one sentence were to summarize Trump’s oil policy, it would be: “Only oil from countries controlled by—or aligned with—the United States may be purchased; otherwise, trade with the U.S. will be restricted.” A hallmark of this principle was the additional 25% tariff imposed on India for purchasing Russian oil—bringing the total tariff to 50%. After targeting Venezuela, Iran, and Russia, the United States’ next potential target may be Iraq—a longtime ‘friend.’ Iraq and Iran are both predominantly Shia Muslim nations. Following the U.S. troop withdrawal, Iraq’s government has gradually gravitated toward Iran. Meanwhile, facilities operated by the U.S. and its allies in Iraq have become targets for Iranian-backed militias—attacked via rockets, drones, and roadside bombs. As a result, major Western oil companies—including ExxonMobil, Chevron, BP, Shell, TotalEnergies, and ENI—have progressively scaled back operations or withdrawn entirely from Iraq over the past several years. According to Western media reports, Chinese oil companies currently manage over one-third of Iraq’s proven reserves and two-thirds of its current production.

Carlyle Deal to Buy Lukoil International Assets Expires

1 day ago

Carlyle Group confirmed its agreement to acquire Lukoil PJSC's foreign assets has terminated due to regulatory issues. The Russian oil major remains active in selling its international network of refineries and fuel stations following sanctions.

bloomberg

2026-10-08

Carlyle Deal to Buy Lukoil International Assets Expires

Carlyle Deal to Buy Lukoil International Assets Expires

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