Baku Port Refused to Work with Russian Lukoil Oil After US Sanctions

After US sanctions, the Russian company Lukoil has problems in Azerbaijan. Starting in November, the company will stop supplying oil to Baku.

Lukoil used the port of Baku to ship oil from two fields on the Caspian Sea shelf, writes the “Bukva” publication with reference to Reuters. 

Starting in November, Lukoil will stop supplying oil to Baku and redirect it to Makhachkala. From there, the raw material will be pumped through a pipeline to Novorossiysk, from where it will be exported abroad by tankers.

According to the agency, in November, the company will deliver about 30 thousand tons of oil to Makhachkala, and from December it will redirect the entire volume that previously went through Baku there — about 130 thousand tons.

Thus, starting in 2022, the oil refinery of the state company SOCAR began to buy part of the produced oil, after Lukoil lost access to the Baku-Tbilisi-Ceyhan pipeline, which belongs to foreign companies. Some of the raw materials are also shipped through the Caspian Pipeline Consortium.

Lukoil’s overseas “oil empire” includes refineries in Bulgaria, Romania and the Netherlands, a network of gas stations in the EU, as well as production facilities in Azerbaijan, Kazakhstan, Uzbekistan, Iraq, Egypt, the UAE, Latin America and Africa.

The Russian company announced the sale of its foreign assets to Norway’s Gunvor, but as a result it may lose up to 15-17% of its total hydrocarbon production. According to analysts, Lukoil produces 6.5% of its oil and almost half of its gas outside Russia, while foreign refineries provide a quarter of its total oil processing. The loss of these assets, analysts warn, could significantly hit the company’s financial performance.

As a reminder, on October 22, the US imposed sanctions against the largest Russian oil companies Rosneft and Lukoil. The sanctions also affect about 50 of their subsidiaries.

As previously reported by USM, the sanctions imposed against the Russian oil giants could deprive Russia of up to $5.5 billion in monthly revenues. Despite the fact that the US sanctions will come into effect only on November 20, the effect is already noticeable. Contracts for the supply of Russian oil have begun to lose demand – in a week, the volume of contracts fell by 20%, and Chinese buyers “sharply lost interest.”