The U.K. and U.S. governments separately announced new sanctions packages this month targeting Russia’s largest oil companies, Lukoil and Rosneft, in a bid to cut off Kremlin revenue streams supporting its invasion of Ukraine.
The two companies account for a combined 3.1 million barrels per day of oil exports, with Rosneft alone responsible for about 6% of global oil output and nearly half of Russia’s production.
Lukoil has extensive operations in Europe, including lubricant blending and distribution. The company’s plants in Hamina, Vienna and Ploiesti plants currently supply Lukoil-branded and private-label lubricants to distributors and workshops in Finland, Germany, Austria, Czechia Hungary, Romania and Serbia.
LLK also manages Lukoil Marine Lubricants, a Singapore-based global supplier of marine-engine oils with a network of supply points across Asia, Europe and the Middle East.
These lubricant and marine-oil units, together with Lukoil’s Ploiesti refinery, a larger refinery in Burgas, Bulgaria, and retail fuel networks in the Balkans, are now included in the company’s divestment plan.
The U.K.’s measures include freezing assets, banning trust services, disqualifying directorships and restricting transport, and extend to foreign-based oil terminals, specialized LNG tankers and shipping vessels supplying Russian oil. Other elements of the package include banning imports into the U.K. of oil-products refined in third countries from Russian-origin crude, as well as sanctions on companies supplying electronics and components used in Russian weapons.
The ban on imports of oil products refined from Russian-origin crude contributes to closing a key bypass route, the government said.
“The U.K. sanctions are good, but the EU is also trying to put through its 19th package of sanctions. And it’s been like this from the start of the war,” Michael Bociurkiw, a global affairs analyst and Atlantic Council fellow, told Lube Report. “But the Russians have the benefit of learning from the experts and sanctions invasions – the Chinese, the North Koreans, the Iranians.”
On Oct. 22, new U.S. government’s sanctions also named Lukoil and Rosneft and said it will freeze any U.S.-based assets and bar American persons or firms from business dealings with them. The measures also allow for secondary sanctions against foreign banks or other intermediaries that facilitate oil-trade transactions.
“The US announced the sanctions to a big fanfare just before Mr. Trump left for his Asia whirlwind tour. But the wording is somewhat vague,” Bociurkiw said. “There’s a four-week grace period for Russian infrastructure – the oil the gas companies, the shadow fleets, the boats, all that stuff to adapt to these new restrictions.”
Lukoil Marine Lubricants is expected to continue operations until new ownership is arranged and marine clients have been advised to use existing supply channels.