The United States Department of the Treasury has issued a general license authorising the continuation of Lukoil’s service station operations outside Russia until 29 April 2026. The decision allows operations in several strategic regions to continue, while blocking financial flows to the Russian Federation.
A legal framework for financial neutralisation
Lukoil and Rosneft were listed as Specially Designated Nationals (SDNs) in October under Executive Order 14024. This measure prohibits any transaction with US persons and exposes third-party entities to secondary sanctions. However, General License No. 128B introduces an exception: it authorises transactions necessary for the operation of service stations and the purchase of products, as long as no funds are transferred to Russia.
The relevant bank accounts may be used for these operations but remain blocked outside this authorised scope. A key clause of the licence specifies that “funds generated may not be transferred to any person or account located in the Russian Federation”, requiring operators to strictly separate financial flows.
Protection of strategic assets and orchestration of sales
Lukoil operates around 2,000 service stations in more than ten countries, notably in Eastern Europe, the Middle East, and the United States. Critical infrastructure such as the Burgas refinery in Bulgaria is also covered. A separate licence ensures the continuation of Bulgarian operations until April 2026.
Several potential buyers, including ExxonMobil, Chevron, Carlyle, and Gulf sovereign funds, have expressed interest in the entire international portfolio, valued at $22bn. The US Treasury retains veto power over transactions. A proposal from Gunvor has already been rejected for political reasons.
Energy continuity without benefit to Moscow
US authorities aim to prevent fuel supply disruptions in allied countries while reducing Russian revenue. Stations remain operational but are considered “financially orphaned” assets from Moscow’s perspective. This approach limits inflationary risk for allies and restricts Lukoil’s ability to repatriate funds to its parent company.
Revenue generated is used exclusively for operations, maintenance, and asset sale preparation. Lukoil cannot use these funds to finance activities in Russia or distribute dividends. As such, the assets are financially neutralised.
Gradual disengagement under regulatory supervision
Lukoil’s international portfolio is now structured as a divestment backlog under supervision. Each transaction requires US government approval. This structure may lead to valuation discounts and prolonged timelines due to compliance requirements.
Lukoil may refocus on Russia and a few non-Western jurisdictions. The exit of shareholders such as Leonid Fedun has increased the influence of figures closely tied to Russian authorities within the company’s governance.
Role of local governments and market implications
Several countries, including Romania and Bulgaria, have adopted or are considering temporary control mechanisms to avoid service disruptions. These measures enable governments to manage transitions in case asset sales fail or if the US licence is not renewed.
Oil markets thus benefit from temporary stability in affected regions. For investors, the current period offers consolidation opportunities but requires heightened compliance to ensure no financial benefit accrues to Russia.
