Gunvor Group Chief Executive Officer Torbjörn Törnqvist said a deal to acquire the international assets of sanctioned Russian oil producer Lukoil PJSC represents a “clean break” for the portfolio and should pass muster with regulators.
“We believe it is satisfying all the concerns that may arise from a transaction of this magnitude and given the parties involved,” Törnqvist said in an interview with Bloomberg Television. He ruled out selling any of the assets back should sanctions on Lukoil be removed.
“It’s a clean break; the moment the deal is done — that’s it.”
Lukoil last week announced it had agreed to sell Gunvor its vast international network of oil wells, refineries and gas stations, as well as its trading book, without disclosing terms.
If finalized, the deal is a coup for Gunvor, a large trader of oil and gas that has longstanding ties to Russia’s energy industry. In 2014, co-founder Gennady Timchenko was sanctioned by the US, which claimed Russian President Vladimir Putin had “investments in Gunvor,” which the company has consistently denied.
Törnqvist said he believes any concerns the authorities might have about continued Russian influence over the portfolio would be satisfied. “We’re pretty confident that this deal ticks off all the critical boxes,” he said Tuesday.
The US blacklisted Lukoil and fellow Russian oil giant Rosneft PJSC last month as part of a fresh bid to end the war in Ukraine by depriving Moscow of revenues. Gunvor’s subsequent deal is subject to clearance from the US Treasury’s Office of Foreign Assets Control, among other authorities.
As part of the sanctions, Lukoil and its Litasco trading arm have a short window to wind down business dealings. Gunvor is in talks with US regulators to secure an extension to a license to transact with the Russian company.
The US license currently expires Nov. 21, and Tornquist said he expects an extension similar to the one granted for Rosneft’s German unit — a six-month reprieve.
“It’s absolutely essential that we get an extension,” he told Bloomberg News on the sidelines of the Adipec conference in Abu Dhabi.
Törnqvist, who owns about 85% of Gunvor, said Lukoil’s assets would help his firm as oil markets become more crowded and competitive. Trading margins have weakened this year and Gunvor’s own profits slumped 71% in the first half.
Still, some assets could be spun off to other parties, he indicated.
“It’s clear, there are assets perhaps that we feel should be better preserved in other hands,” he said, adding that it was “premature” to be discussing finer details.
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