Lukoil, Russia’s largest private oil company, has asked Moscow for a bailout. The beleaguered oil company is seeking government aid it believes it is due because of sanctions stemming from the state’s nearly four-year-old full-scale war on Ukraine and the ensuing nosedive of oil prices around the globe.
As prices for Russian crude are being sold at a discount of almost 50 percent off of global benchmarks, the company has appealed to Russia’s Ministry of Energy to change taxation rules in order to receive payments from the federal budget, the Moscow Times reported on Monday.
Legislation introduced to the Russian Duma, or parliament, in 2018 attempted to stabilize global prices for its domestic producers and exports by compensating them out of its own coffers if domestic fuel prices remained below global levels. Yet if the situation were to be reversed, the companies would be charged an additional tax.
But international prices, and the exchange rate of the ruble against the dollar, have caused a plummeting in profit for Lukoil and other Russian energy providers.
Lukoil has proposed capping the discount used for tax calculations at $10 to $15 per barrel, which would eliminate payments by oil companies and instead allow them to receive budget compensation.
Global prices for crude, overall, plummeted more than 18 percent in 2025, the sharpest annual drop since the Covid pandemic in 2020.
On the week of Moscow’s full-scale invasion of Ukraine in February 2022, crude prices sat around $122 per barrel (the cost of West Texas Intermediate, WTI, or light sweet crude.) Earlier this month, that same price was under $60 per barrel.
Exacerbating the outlook for Russian oil exporters, the ruble gained about 45 percent against the US dollar in 2025, and when your currency is expensive, you will sell less product internationally.
But that doesn’t affect domestic prices, on which the Duma’s rules are based.
Last year, the Russian government paid oil companies 881 billion rubles (about $11.5 billion) under the Duma’s 2018 financial mechanism. However, amid the low price of Urals crude – Russia’s benchmark oil – oil companies will now have to pay back 47 billion rubles (around $614 million) to the budget in December and January, according to experts interviewed by the Moscow Times.
Those analysts said this will further strain oil companies’ finances at a time when they are already seeing a sharp fall in profits from international sales: In the first half of 2025, Lukoil’s profit halved to 287 billion rubles (around $3.7 billion), down from 590 billion rubles (about $7.7 billion) a year earlier.
Buyers, Anyone?
Consequently, Lukoil has been looking for buyers, just as other sanctioned Russian oil subsidiaries have been forced to do for their foreign assets.
Gunvor, a Swiss-based trading house, wanted, but failed, to buy Lukoil’s foreign assets after the US Treasury described the company as a “Kremlin puppet” and stressed that it would “never” approve the deal, prompting the company to immediately withdraw its offer.
Hungarian company MOL, the same group that bid for a Russian-controlled refinery in Serbia this month after sanctions there took hold, told US officials that it is interested in purchasing Lukoil as well.