The company that wants to buy Lukoil assures that it will “break away cleanly” from Russian control

Gunvor, the company approved by Lukoil as a buyer of its assets known to be controlled by a business partner of Vladimir Putin, assured on Tuesday that it would “cleanse” itself from Russian control.

Gunvor assures that he will cleanly break away from Russian control. Photo by Shutterstock

Global commodities trader Gunvor is prepared to address any concerns about continued Russian influence over assets it is buying from Russian oil company Lukoil, CEO Torbjorn Tornqvist told Bloomberg on Tuesday.

Last week, Lukoil announced that it had accepted Gunvor's offer to buy its international assets, following recent US sanctions.

Gunvor, which has long ties to Russia's energy industry, has begun negotiations with regulators over the planned acquisition, Bloomberg reported Tuesday.

Tornqvist ruled out a scenario in which the assets will be resold after the lifting of the sanctions imposed on Lukoil. He said the deal would represent “a clean break” from Russian control, and some of the assets could be sold on.

The sale of Lukoil's international assets is the most significant action so far by a Russian company, following the sanctions imposed in the context of Moscow's invasion of Ukraine, which began in February 2022.

On October 22, US President Donald Trump imposed sanctions on the largest oil companies in Russia, Lukoil and Rosneft. Earlier on October 15, Britain also targeted Lukoil and Rosneft, as well as 44 so-called oil vessels that make up Russia's shadow fleet, made up mainly of old oil tankers with unclear owners, in a new bid to tighten energy sanctions and cut Kremlin revenues.

Lukoil is the Russian oil company with the most diversified international operations, having upstream operations in former Soviet countries such as Kazakhstan, Uzbekistan and Azerbaijan, but also in Egypt, the United Arab Emirates and in West African states such as Ghana, Nigeria, Cameroon and Congo. In all these projects, the Russian producer holds minority stakes, and their share in Lukoil's total crude oil production was only 5% last year, according to the company's annual report.

The international assets together represent about a quarter of Lukoil's current capitalization, according to the estimates of Kirill Bakhtin, an analyst at BCS.

Lukoil's international trading operations are much more important than its exploration and production operations. Last year, the company bought and sold 59.6 million tonnes, or an average of 1.19 million barrels per day, according to its annual report. Litasco, the commercial subsidiary owned 100% by the Russian group, operates from Geneva and Dubai.

Also, Lukoil has a network of over 5,300 gas stations in 20 countries around the world, as well as refineries in Europe. Their combined output last year reached 13.5 million tonnes, or about 270,000 barrels per day, according to the annual report.

In Romania, Lukoil owns the Petrotel refinery and sells fuels through a network of 300 distribution stations.

Gunvor, founded by Putin's friend and business partner

Gunvor Group Ltd, which would buy Lukoil's assets abroad, is a commodity trading company in the field of energy (oil, gas, LNG). It is registered in Cyprus and has its main office in Geneva, Switzerland. The company was founded in 2000 by Gennady Timchenko, a Russian oligarch close to Vladimir Putin.

Timchenko founded the company with Torbjörn Törnqvist, an oil magnate from Sweden.

In March 2014, Timchenko sold all holdings to Törnqvist, in the context of US sanctions. Timchenko was sanctioned by the US following Russia's annexation of Crimea in 2014.

According to a 2022 report, Törnqvist owned 85.7% of the shares, with the rest held by employees, according to Hotnews.

In September 2023, Swiss prosecutors indicted a former employee of the company for paying bribes to gain access to the oil market in the Republic of Congo. Following an eight-year investigation, the company was ordered to pay 94 million Swiss francs ($94 million) in 2019 over bribery allegations.

According to a statement published on the website of the US Department of Justice, in March 2024, the Gunvor company pleaded guilty to conspiracy to bribe Ecuadorian officials and is required to pay more than $600 million in criminal penalties.

In 2022, Pakistan State Oil Company Limited won an arbitration against Gunvor, in which it was awarded $14.6 million in damages, for overpriced gas supplies.