March 3, 2022
Lukoil, Russia’s second-largest oil company, appeared to distance itself from President Vladimir V. Putin on Thursday by calling for a “fast resolution” to Russia’s invasion of Ukraine.
The statement most likely reflects the company’s desire to protect its extensive overseas operations, which include a network of more than 200 franchised gas stations in states like New York and New Jersey. Lukoil is one of the most recognizable Russian brands in the United States.
Many lawmakers in Washington are pressing the Biden administration to ban the purchase of Russian oil by U.S. companies and to impose sanctions on Russian energy companies. Shares of Lukoil on the London Stock Exchange have fallen more than 40 percent since mid-February.
Lukoil has long projected a more independent image than Rosneft, the state-controlled company that dominates the Russian oil industry. Lukoil was founded in 1991 as a state-owned enterprise as the Soviet Union was falling apart. The company went private in 1993, and seven years later it acquired Getty Oil, an American company, which gave Lukoil a network of U.S. filling stations.
“We stand for the immediate cessation of the armed conflict and duly support its resolution through the negotiation process and through diplomatic means,” Lukoil said in a letter to shareholders on Thursday.
It was not clear whether the move was a sign that executives of Russia’s largest private enterprise were breaking with Mr. Putin, or mainly an effort to persuade Western leaders, business partners and customers to keep doing business with the company.
“It says they realize it’s going to be difficult for them to engage in international commerce, let alone retail sales in the U.S.,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service. “I’d call a Russian brand for gasoline the 21st-century equivalent of the scarlet letter.”
While petroleum products are the biggest Russian import in the United States and Europe, Russian products and sports teams have become pariahs. Several states have banned the sale of Russian vodka, and restaurants, stores and bars across the United States have taken Russian spirits off their shelves.
The Newark City Council voted on Wednesday to suspend the business licenses of local Lukoil gas stations.
Lukoil stations in the United States sell fuel produced in many countries, including the United States. They are operated as independent franchises, and make up a small fraction of Lukoil’s operations. The company has subsidiaries in roughly 30 countries, including those involved in exploring and producing oil and gas in Azerbaijan, Egypt, Colombia and Iraq. The company’s biggest reserves are in Russia, particularly western Siberia.
In its letter to shareholders, Lukoil said it “makes every effort to continue stable operations in all countries and regions of its presence, fulfilling the main mission — to provide reliable energy supplies to consumers around the world.”
Source: NY Times
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