This clarifications were up-dated by OFAC on 18 December 2025. Please see our up-date post on this up-date.
On 19 November 2025, OFAC issued important clarifications as to the announced disposal by Lukoil of its offshore assets. Lukoil made this announcement following its designation to OFAC SDN list (see our previous post on this designation).
The clarifications are useful with respect to Lukoil’s specific situation, but also as setting out the general policies of how OFAC’s is likely to treat similar requests to authorise disposals of the blocked assets.
To the extent a US element is involved in any such a transaction, the correct procedure is as follows:
- An OFAC licence shall be obtained to start non-binding negotiations. In case of Lukoil, this requirement was implemented by way of publication of general licence 131.
- The completion of the transaction shall be conditional on receipt of a separate OFAC licence specifically authorising completion. At this stage OFAC will engage in detailed due diligence of the parties involved and the terms of the transaction.
- When considering whether to issue or not such a second licence with respect to the completion of the transaction, OFAC will take into account the following factors:
- whether the transaction completely severs ties with the blocked person (i.e., any buy back, restrictions on operation, leaving existing management in place or similar provisions are unlikely to be acceptable);
- whether the transaction blocks funds owed to the blocked person until sanctions are lifted (i.e., the payment of the purchase price will need to be made to a US blocked account and remain there when sanctions are in place); and
- whether the transaction does not provide a windfall to a blocked person (i.e., that the terms of the transaction are market).
It is not clear whether OFAC will apply similar requirements to any transaction with respect to blocked assets which does not have a US element or may be willing to relax its approach.
The full text of the FAQ is set out below.
1224. What activities does OFAC General License 131, “Authorizing Certain Transactions for the Negotiation of and Entry Into Contingent Contracts for the Sale of Lukoil International GmbH and Related Maintenance Activities,” authorize?
Answer
On October 22, 2025, OFAC designated PJSC Lukoil (Lukoil) to increase pressure on Russia’s energy sector and degrade Russia’s ability to raise revenue for its war machine. OFAC is aware of potential efforts by Lukoil to divest its assets outside of Russia to non-blocked parties, given the impact of sanctions. To support such divestments and further cut off funding to Russia, OFAC issued GL 131, which authorizes negotiations and entry into contingent contracts with Lukoil for the sale of Lukoil International GmbH (LIG) or any of LIG’s majority-owned subsidiaries. Authorized activities include negotiations on terms for definitive agreements and financial, legal, or operational due diligence, including engagement of outside counsel or advisors. GL 131 expires on December 13, 2025.
GL 131 does not authorize transactions to effectuate the actual sale, disposition, or transfer of any LIG entity or asset. Any contract entered into pursuant to GL 131 must expressly be made contingent upon the receipt of a separate authorization from OFAC. The goal of OFAC’s Russia sanctions is to place pressure on Moscow to end its war. As such, Treasury would evaluate any proposed sale of LIG based on factors that support U.S. national security and foreign policy objectives, such as whether the transaction: completely severs ties with Lukoil; blocks funds owed to Lukoil until sanctions are lifted; and does not provide a windfall to Lukoil.
GL 131 also authorizes through December 13, 2025 transactions ordinarily incident and necessary to the maintenance or wind down of operations, contracts, or other agreements of LIG entities. This includes transactions ordinarily incident and necessary to performing pre-existing agreements, provided that such transactions are consistent with previously established practices and support pre-existing projects or operations. Such activities could also include payments to employees, suppliers, landlords, lenders, and partners; the preservation and upkeep of pre-existing tangible property; or activities associated with maintaining pre-existing capital investments. However, any payment made, directly or indirectly, to LIG entities or any other blocked person must be made into a blocked account in accordance with the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587, unless separately authorized by OFAC.
OFAC may revoke GL 131 at any time, including if Lukoil and LIG do not appear to be engaging in good faith negotiations regarding the divestment of LIG or its assets.
Date Released
November 19, 2025