Lukoil ‘Garage Sale’ – Uzbekistan Bows Out, Kazakhstan Keeps Its Options Open

After a deal to offload assets to Guvnor collapsed, several analyses now say a full package sale is unlikely

The story of the disposal of foreign assets by Lukoil, which has fallen under U.S. sanctions, is reaching its closing stages. A shortlist of potential buyers has already emerged, and in Kazakhstan intrigue remains: will the country’s national oil and gas company capitalise on the opportunity to acquire Lukoil’s shares in major projects?

A recent Reuters report noted that potential buyers of Lukoil’s assets face two key complications: first, U.S. firms, such as Carlyle, Chevron, and Exxon, are seen by analysts as more likely to get licensed, meaning deals will only be recognised after proper U.S. licence approval. Second, Lukoil itself had preferred to sell its assets as a package deal rather than piecemeal.  However, after a deal to offload assets to Guvnor collapsed, several analyses now say a full package sale is unlikely and that piecemeal deals are more realistic or even more profitable. A new negotiation deadline has now been set for December 13, 2025, for the completion of authorised transactions. 

Kazakhstan-based oil and gas market observer Oleg CHERVINSKY suggests that this could increase the likelihood of a “twostage process”. “Most likely, a single buyer with sufficient resources will purchase all of Lukoil’s foreign assets at a significant discount, then sell them off in parts,” Chervinsky said.

Some media reports point to the U.S. investment firm Carlyle Group as showing interest in Lukoil’s assets. The firm is considered a plausible main buyer due to its former ties to U.S. presidents Bush senior and junior. In this scenario, Carlyle would act both as buyer and organiser of the subsequent ‘garage sale’ of individual assets. Other firms, such as Chevron Corporation and ExxonMobil, have already been linked in reports with interest in Lukoil’s Kazakh stakes in the Tengiz and Karachaganak oil fields, while Abu Dhabi National Oil Company (ADNOC) has shown interest in Lukoil’s Uzbek gas projects. 

Meanwhile, three weeks ago, Uzbekistan made its position clear: it will not participate in the acquisition of Lukoil’s assets. Uzbekneftegaz Chairman Bahodir SIDIKOV said that “Buying out Lukoil’s assets in Uzbekistan is not on the table right now.” 

In Kazakhstan, energy sector experts believe that this moment presents a real window of opportunity to acquire Lukoil’s shares in systemically important oil and gas projects. “Why hasn’t our Ministry of Energy asked: does the Ministry approve changes in the shareholder structure under the terms of the stabilized contracts for Tengiz and Karachaganak? These shares (if a sale takes place) should go to KazMunayGas. If KMG doesn’t have the cash, then the Chinese state-owned CNPC should be brought in. To balance interests, it would be optimal for one of the world’s largest oil corporations to enter Tengiz and Karachaganak,” argues specialist Olzhas BAIDILDINOV.

Baidildinov cited a review by Norway’s Rystad Energy estimating that Lukoil’s net cash flow from its Tengiz stake over the next five years will total $2.8 billion, and from Karachaganak $2.1 billion.

However, Kazakhstan’s Energy Minister Erlan AKKENZHENOV recently stated that the government is not considering a purchase of Lukoil’s shares. At the same time, Samruk-Kazyna national wealth fund chairman Nurlan Zhakupov confirmed that the wholly state-owned KazMunayGas is in negotiations with Lukoil regarding its assets in Kazakhstan. He said there will be no “simple solutions”, but consultants are working on possible proposals, and a decision is expected shortly. 

Economist Rasul RYSMAMBETOV has called the development “excellent news… The raw materials are important, but so is sovereignty when the owner of the asset still lives in Kazakhstan. I think the price for Lukoil should be slightly lower because of the stressful nature of the assets,” he said.

By The: The Times Of Central Asia.

Image: TCA, Stephen M. Bland.

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