Lukoil lost about $10 billion in capitalization after US sanctions

Shares of Russian oil and gas giant Lukoil fell to their lowest level in two and a half years this week.

Shares of PJSC Lukoil have been falling on the Moscow Exchange for the fourth week in a row amid US sanctions and a thwarted attempt to sell foreign assets. Ukrinform reports.

The company’s shares fell to 4,900 rubles per share, the lowest in two and a half years. The drop was 4.6% per day, 7.4% per week, and 18.6% since October 23, when the US announced the relevant restrictions. As a result, the company’s capitalization has decreased by about $9.6 billion.

Analysts call Lukoil the leader of the decline on the stock exchange, noting that investors are worried about potential losses of the company’s foreign assets. In particular, the blocking of the sale of assets to the Swiss Gunvor was just one example of a complicated strategy for exiting foreign markets.

According to Financial Times sources, Lukoil could lose around €14bn in foreign assets, a significant part of its total revenue. A former top manager of the company adds that this could mean the loss of around a third of its revenue, which last year amounted to 8.4 trillion rubles.

The license issued by the US Treasury Department to complete deals with Lukoil expires on November 21. However, a sale in such a short period is considered practically impossible – the typical period for the sale of such assets is 6-12 months.

Lukoil is now no longer able to operate some projects abroad, in particular in Iraq (the West Qurna-2 field) and Finland (the Teboil network).

Meanwhile, Litasco’s trading unit in Switzerland is unable to charter tankers or make payments for oil deliveries.

At the same time, the decline in capitalization increases the financial vulnerability of the Russian company in the absence of stable access to external markets.

USM previously reported that sanctions against Rosneft and Lukoil could deprive the Kremlin of up to $5.5 billion per month.