Russian Lukoil's international network buckles under sanctions pressure

Reuters reported the information.

The impact of sanctions imposed last month on Russia's second-largest oil company is intensifying as a November 21 wind-down deadline approaches. The measures are complicating normal operations to such a degree that the company's foreign network is buckling.

In Iraq, the state-run firm Somo has reportedly canceled three crude oil cargo loadings from Lukoil's major West Qurna-2 field, where it holds a 75% stake. Market sources cited concerns over the new sanctions as the reason for halting the shipments, which were scheduled for November.

Meanwhile, Lukoil's Geneva-based trading arm, Litasco, is faltering. Sources claim the trader has struggled to charter ships because U.K.-based brokers are refusing to work with them due to the sanctions. This disruption has also reportedly led to Litasco sacking employees.

The fallout is also hitting the retail level in Europe. In Finland, roughly 1,000 workers at Lukoil-owned Teboil gasoline stations fear for their jobs. The panic comes as Finnish banks have already begun to freeze payments to Teboil, implementing the sanctions ahead of the official deadline.

The pressure appears to have forced Lukoil's hand, as the company accepted an offer last month from commodity trader Gunvor to purchase its foreign assets.

Gunvor Chief Executive Torbjorn Tornqvist, speaking to the Financial Times on Tuesday, confirmed the severity of the situation. "Lukoil’s whole international operations are paralysed. Nobody can transact with them. A lot of jobs are at stake and the refining capacity could be very disrupted," he told the publication.