LONDON: US private equity firm Carlyle has begun exploratory talks with UAE investors to bring in a partner if an initial deal to buy Russian company Lukoil’s international assets goes ahead, three sources familiar with the process said. Carlyle and Lukoil on Thursday announced a preliminary agreement to transfer a wide range of assets, including oil fields in Iraq and refineries in Eastern Europe, to American companies, pending approval from U.S. authorities, which have placed the Russian producer under sanctions.
The two companies did not disclose the valuation of the deal, which excludes Lukoil’s Kazakh assets, because no agreement has been reached yet, another person familiar with the matter said on Thursday.
Abu Dhabi state investors Mubadala, XRG and IHC have held talks with Carlyle about taking a stake in Lukoil’s portfolio if the U.S. company completes the deal, but no agreement has been reached, three sources said.
A fourth source said the assets were worth about $20 billion. A fifth said UAE investors were particularly interested in Lukoil’s trading arm, Ritasco.
It remains unclear when Carlyle would bring on a partner if the deal goes forward. The U.S. company plans to keep its portfolio intact, one of the people said. Private equity buyers in the energy sector typically seek to hold assets for around five years before selling them at a profit.
Lukoil, Mubadala and XRG did not respond to requests for comment.
Mr. Carlisle declined to comment. IHC said it intends to disclose material developments in accordance with applicable market regulations and requirements and appropriate announcements will be made as required.
Carlyle said Thursday it still needs to complete due diligence on the Lukoil assets. The transaction will be structured in accordance with rules set by the Office of Foreign Assets Control (OFAC), the U.S. sanctions authority.
Lukoil said it is continuing negotiations with other potential buyers.
OFAC said on its website that the cash from the sale must be deposited in an account under U.S. jurisdiction and that the funds will be frozen until sanctions against Lukoil are lifted. The US Treasury has given Lukoil until February 28 to sell its global portfolio, which has attracted interest from multiple potential bidders. (Reporting by Shadia Nasralla, Anna Hirtenstein; Additional reporting by Shariq Khan, Andres Gonzales; Editing by Alex Lawler, Simon Webb, Mark Potter)
