Iraq’s state oil marketing company SOMO has canceled three crude loadings from Russia’s Lukoil this month after the U.S. sanctioned the second-biggest Russian oil producer last month, market sources have told Reuters.
Lukoil has a 75% equity stake in Iraq’s giant West Qurna-2 oilfield, which produces more than 400,000 barrels per day (bpd) of crude oil.
The three loadings from Lukoil from its production at West Qurna-2 were scheduled for November 11, 18, and 26, but Iraq apparently doesn’t want to handle the now-sanctioned barrels.
Following the U.S. sanctions on Lukoil and Rosneft announced at the end of October, oil traders and operators globally are steering clear of any cargoes of the two biggest Russian oil firms to avoid drawing the attention of the Trump Administration and being slapped with secondary sanctions.
Last week, Lukoil said it had agreed to sell its international business to Switzerland-based commodity trader Gunvor, a week after the U.S. slapped sanctions on Russia’s top oil firms, making doing business with their international subsidiaries extremely complex and nearly impossible.
Following the U.S. sanctions on Lukoil and Rosneft, “as a result of Russia’s lack of serious commitment to a peace process to end the war in Ukraine,” Lukoil announced it would sell all of its international assets, initiating a formal process to receive bids from potential buyers.
Last week, Lukoil said in a statement that it had received – and accepted – an offer from trading giant Gunvor Group to buy Lukoil’s 100%-owned subsidiary LUKOIL International GmbH, which owns the international assets of LUKOIL Group.
If necessary, Gunvor and Lukoil will apply to OFAC for a license extension beyond November 21, the deadline for wind-down of operations, to complete the transaction.
Meanwhile, Russia’s top crude buyers, China and India, are looking for alternative supply, or at least Russian crude handled by non-sanctioned entities.
By Tsvetana Paraskova for Oilprice.com
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