Frozen Lukoil Papers Priced at 30 Cents on the Dollar in Swap for Its International Assets

Key Facts

Reuters reported on November 3 that a bank acting for a consortium led by U.S. investor Todd Boehly had bought frozen Lukoil securities from Western investment funds, ahead of an exchange for the company's international assets. Three sources told the news agency that the securities were worth billions of dollars and had been priced at 30 cents for every dollar of face value. The discount reflects the securities' exposure to sanctions, according to two sources. The plan aims to acquire Lukoil's overseas portfolio through a non-cash swap rather than a direct payment to the Russian company. No final deal value or details on how the assets would be allocated among the consortium's members have been disclosed.

The swap involves frozen securities held by Western investors, including Capital Group, in exchange for Lukoil's international assets, Reuters reported, citing people familiar with the matter. Two sources said the consortium had made progress after agreeing to place the securities in escrow rather than transfer them directly to Lukoil. The arrangement comes as U.S. sanctions restrict dealings with the company and its assets. The U.S. Treasury Department did not respond to Reuters' request for comment on the plan. The report did not specify the securities' purchase value or the consideration each participating investor would receive.

The portfolio includes oil fields, refineries and fuel stations in Europe, the Middle East and Africa. It was initially valued at about $22 billion when the sale process began, and the process had lasted more than a year as of November 3, Reuters reported. Sources told the news agency that the portfolio's value had fallen after some assets stopped operating. The initial valuation does not necessarily equal the value of the proposed deal, whose final price has not been disclosed. Operating status matters to the asset valuation given the portfolio's geographic breadth and mix of production, refining and distribution assets.

The consortium includes Boehly, Emirati investors International Holding Company and Al Hail Holding, the Syrian-Qatari Khayat brothers, and the U.S. International Development Finance Corporation, Reuters reported. The report provided no details on participants' stakes or each one's financing contribution. Reuters said representatives of some parties did not respond to requests for comment or declined to comment. The agency described the consortium as among the leading contenders after Carlyle Group exited the active pursuit of the assets. Carlyle signed a non-exclusive agreement with Lukoil on January 29, subject to regulatory approvals, before announcing on October 9 that it was no longer actively pursuing the deal.

The sale process drew bids from more than a dozen companies, including Exxon Mobil, Chevron, Carlyle Group and businessman Bernd Bergmair, Reuters reported. Boehly's bid comes after the U.S. Treasury Department issued General License 131K on October 21, allowing negotiations and contingent contracts related to the sale of Lukoil International GmbH. But the license does not authorize the sale to be completed, or the assets to be disposed of or transferred, without separate approval from the Office of Foreign Assets Control. The license expires on November 21, 2026, setting the current timeframe for negotiations and contingent contracts. Lukoil said it would announce a specific deal after final agreements had been reached and the necessary regulatory approvals obtained.

Office of Foreign Assets Control guidance says any sale should sever the subsidiary's ties to Lukoil, and that funds owed to the Russian company must be held in an account under U.S. jurisdiction until sanctions are lifted. It also requires that the deal not result in an undue benefit to Lukoil, including through an exchange of assets or shares. This condition directly constrains the proposed swap structure, even though the arrangement avoids a direct cash payment at closing. Any contracts entered into under the license remain contingent on separate authorization from the office to complete the sale or transfer the assets. Approval to negotiate therefore remains distinct from the final approval required to transfer ownership.