After Gunvor's withdrawal from the deal, Lukoil may sell its foreign assets in parts, most easily to existing project partners, experts believe. They estimate their fair value at approximately USD 12 billion, but do not rule out the possibility that, in the event of a quick deal, the assets could be sold at a significant discount.
Now it will be more profitable for Lukoil to sell its assets in bulk and there is no need to rush the deal, noted Kirill Bakhtin, head of the Russian equities center at BCS World of Investments, quoted by TASS. “At the moment, the urgency factor has been eliminated: it is essentially impossible to complete the sale of any asset at an acceptable price before November 21, especially given the buyer's desire to protect itself from additional risks and, in this regard, to obtain approval for the purchase from the US Treasury Department. Foreign assets have different values and synergies for different potential buyers, so the sale at the highest price for Lukoil is a matter of urgency. "It is possible to sell the assets in parts," he said.
According to the expert, the simplest implementation scenario for Lukoil would be to sell assets to its current partners in these projects.
„I think the deal can now be divided into components and (the company will) sell the assets separately“, agrees Stanislav Mitrahovich, a leading expert at the National Energy Security Fund and a research fellow at the Financial University.
Meanwhile, according to Sergey Kaufman, an analyst at FG Finam, if the US refuses to renew the license to cease operations with the company after November 21, the risk of some of Lukoil's assets being placed under external management increases.
The fair value of Lukoil's foreign projects Lukoil Finam values the assets at $12 billion. “However, finding buyers for all the assets at once in a very short period of time can be quite difficult, especially given the risk that the US Treasury will block the deal again.“ In such a situation, if a buyer is found, the discount, in our opinion, could already be more than 50%“, he noted.
The assets are of interest to the market, Kaufman added. “Regardless of the impact of sanctions, the assets of the Russian oil company are certainly attractive acquisition targets for a very wide range of buyers: large oil and gas companies, oil traders, national oil and gas companies and investment funds“, he believes.
Mitrahovich does not rule out that the company will have to agree to additional discounts. “There is a discount, yes, I think we will have to offer an additional one“, he noted.
In turn, Bakhtin called the situation with the discount on the assets ambiguous, and the deal, according to him, could take at least several months. “On the one hand, there were no key terms agreed in advance, as in the case of Gunvor, and on the other hand, there is no urgency for... sale. There is no need to discuss the discount for now – the market does not know what it would be in the scenario with Gunvor“, he said. According to the expert, Lukoil's main consolidated foreign assets in Bulgaria, Romania and Iraq are valued at approximately 8% of EBITDA, but their sale, provided that the buyer has conducted a full due diligence process, may take at least several months.
In October, the US and UK, included in the list of Lukoil shares, announced their intention to sell their international assets and received an offer from Gunvor to acquire Lukoil International GmbH, which owns the Russian company's foreign assets. Then Gunvor announced that it was withdrawing its offer to purchase Lukoil's foreign assets after the US Treasury Department stated that it would not issue Gunvor a license to operate and generate profits until the conflict in Ukraine is over. Lukoil is implementing a large number of international projects: the company owns two refineries in Europe (in Romania and Bulgaria), as well as a share in a refinery in the Netherlands. By the end of... By 2024, Lukoil also operated an extensive network of gas stations in 20 countries, 2,456 of which were located abroad (including in the United States and Europe). The company also operates in Azerbaijan, Kazakhstan, Uzbekistan, Iraq, the United Arab Emirates, Egypt, Cameroon, Nigeria, Ghana, the Republic of Congo, and Mexico.