Saudi-backed Midad Energy has signed a term sheet to buy Russian-sanctioned Lukoil assets in a high-stakes race with rivals including private equity giant Carlyle Group, according to three people familiar with the matter, but the deal is subject to U.S. regulatory approval.
The move highlights the Russian energy giant’s continued efforts to shed overseas holdings constrained by Western sanctions and underscores the Middle East’s growing interest in acquiring global oil and refining assets at discount prices, even as the deal remains subject to intense regulatory scrutiny and geopolitical risk.
The deal was signed in late January and covers all of the assets in question, sources said. Midad has agreed to place the all-cash offer in escrow while the companies seek necessary regulatory approvals, including the U.S. Treasury. This is a structure designed to maintain trade while avoiding sanctions regulations.
“Midad is working to ensure necessary regulatory compliance. The bid is seen as a high-stakes decision backed by strong political ties to Saudi Arabia,” said a person familiar with the deal.
Midad and Lukoil did not respond to requests for comment. The U.S. Treasury Department did not immediately respond to a request for comment.
In recent months, U.S. authorities have issued a series of temporary general license extensions related to sanctioned Russian energy assets, allowing limited time for maintenance, wind-down activities and, in some cases, consideration of a potential sale under strict conditions, according to people familiar with the process. The extension is intended to prevent sudden disruptions to the energy market while allowing regulators to monitor ownership changes.
The final transfer of Lukoil’s sanctioned assets still requires explicit U.S. approval, and there is no guarantee that the U.S. government will approve the sale, especially given ongoing geopolitical tensions and related complex compliance reviews, the people added.
The negotiations are unfolding against the backdrop of the ongoing Ukraine-Russia war, which President Donald Trump has struggled to bring to an end despite promises to end the conflict quickly, adding further uncertainty to the regulatory and geopolitical environment surrounding a potential deal.
Midad had previously emerged as one of the leading candidates to buy Lukoil’s international portfolio, which spans oil fields, refineries and thousands of fuel stations around the world, attracting interest from a wide range of global investors, including a competing bid from private equity firm Carlyle, Reuters earlier reported.
Lukoil has been seeking to sell its overseas operations, which have been hit hard by the U.S. offensive. The sanctions have complicated efforts by Russian energy companies to sell assets overseas, forcing buyers and sellers to use escrow and conditional payment mechanisms while awaiting government approval.
(Reporting by Jarrett Renshaw; Editing by Nick Zieminski)
