LUKOIL in 2025: Losses and Foreign Asset Write-Offs

LUKOIL, one of Russia's largest oil companies, has reported a massive net loss for the first time in years—1.059 trillion rubles for 2025. Net profit from continuing operations came in at 96.652 billion rubles, significantly below the 2024 figure when profit exceeded 794 billion rubles. Operating profit nearly halved—falling to 526.6 billion rubles from 1.067 trillion in 2024.

The primary driver of this result was the impairment of foreign assets. The company's financial statements indicate that investments in LUKOIL International were fully written off following the loss of control over international subsidiaries. These results are reflected as discontinued operations, underscoring that this represents a serious shift in the company's business model rather than simply a temporary margin squeeze.

The role of U.S. sanctions and the geopolitical factor

LUKOIL's losses are directly tied to sanctions imposed by the U.S. Treasury Department in October 2025. The company and several of its subsidiaries were added to the SDN sanctions list, effectively blocking full-scale operations abroad and jeopardizing international activities. In response, LUKOIL was forced to seek buyers for foreign assets or shut down projects, resulting in write-offs at high book values.

The sanctions hit the most profitable part of the business: overseas refining, trading, and retail. These aren't just paper losses, but a real reduction in long-term revenue streams and access to international markets.

What actually happened

In 2025, LUKOIL's revenue fell from 4.4 trillion to 3.8 trillion rubles, while losses from the disposal and impairment of foreign assets totaled 1.667 trillion rubles. This shows that the main cause of the company's crisis is precisely the loss of value in its international business.

Breaking down the causes of the loss reveals three layers: first—impairment of foreign assets, second—erosion of the operating base, third—loss of the most profitable part of the international value chain, including refining, trading, and retail. The biggest blow came to European refineries, gas stations, and trading operations, not just production.

Which assets have already been lost and are under threat

LUKOIL has already lost several key assets abroad. In Italy, it sold the ISAB refinery in Sicily, which processed 320,000 barrels per day—about a fifth of Italy's capacity. In Bulgaria, the company de facto lost control of the Burgas refinery with capacity of 190,000 barrels per day and a network of over 200 gas stations; asset management was transferred to an external administrator.

Following U.S. sanctions, LUKOIL began the process of selling its international portfolio, valued by Reuters at approximately $22 billion. It includes: Bulgaria—Burgas, Romania—Petrotel, Netherlands—45% stake in Zeeland refinery, Iraq—West Qurna 2, USA—around 200 gas stations, Finland—planned closure of gas station network, as well as the trading structure Litasco with offices in Geneva, Houston, and Dubai. Kazakh assets were not included in the deal.

The significance of these assets to the business

LUKOIL's overseas assets accounted for a significant share of refining and retail operations. According to the 2024 annual report, European refineries contributed roughly 25% of combined Russia+Europe refining capacity. Retail sales abroad totaled 4.2 million tons. International production excluding West Qurna 2 stood at around 3.9 million tons, but West Qurna 2 itself delivered over 480,000 barrels per day, making it a major component of the portfolio.

Losing these assets isn't just a paper write-down—it's the dismantling of the company's high-margin superstructure, cutting off access to end markets and premium refining operations.

Consequences for LUKOIL and the Economy

The 2025 outcome shows that LUKOIL is losing its former model of "Russian production + overseas refining and sales + international projects." The company is transforming from a globally diversified structure into a more constrained business dependent on its Russian base and new export channels.

This affects not only LUKOIL's financial performance but also international perceptions of Russia's oil sector. The reduction in overseas assets diminishes the company's capacity for investment, dividend payments, and sustainable growth.

Conclusion

For LUKOIL, 2025 isn't simply about falling profits due to prices or margins—it's the collapse of an international business model. The loss of 1.059 trillion rubles and asset write-downs of 1.667 trillion rubles reflect the consequences of sanctions, loss of control over key assets, and the need to rebuild the company's entire strategy.

LUKOIL today faces the challenge of maintaining financial stability, adapting to new geopolitical conditions, and restructuring its international portfolio to preserve access to refining, retail, and production outside Russia.