Russian economy falters: country’s largest private oil company asks for a bailout

For years, Lukoil was presented as an exception within the Russian energy sector: large, profitable and relatively autonomous from the State. Today, that story begins to crack. The country’s largest private oil company has asked Moscow for direct help to survive a lethal combination of international sanctions, falling oil prices and internal fiscal distortions. caused by the war in Ukraine.

According to sources cited by The Moscow Timesthe company has requested the Ministry of Energy an urgent modification of tax rules in order to receive compensation from the federal budget. In other words: Lukoil wants the State covers part of the losses that right now the market and international politics are imposing on it.

The request It comes almost four years after the start of the invasion on a large scale in Ukraine and in a much less favorable context than that of 2022. Then, oil was touching historical highs; Today, the scenario is radically different.

The Russian discount and the tax trap

The main problem for Lukoil—and for the sector as a whole—is that Russian oil is selling at a discount close to 50% with respect to international reference prices. The sanctions have reduced the available markets, made transportation more expensive and forced them to accept much less advantageous conditions.

to this A fiscal framework designed for another era is added. In 2018, the Duma approved a mechanism aimed at stabilizing the internal fuel market. The system worked like this: if national prices were lower than international prices, the State compensated the oil companies; If the opposite happened, companies had to return money to the budget.

The problem is that the system was not prepared for a prolonged sanctions scenariolow prices and monetary volatility. Today, that mechanism has turned against the companies themselves.

I locked it now proposes artificially limiting the crude oil discount used to calculate taxes, setting it between 10 and 15 dollars per barrel. The objective is clear: stop paying the State and start collecting from it.

The numbers explain the urgency:

Meanwhile, The Russian State continues to use internal prices —higher—as a fiscal reference, forcing oil companies to return money even as their real margins collapse.

Declining profits and assets for sale

In 2024, The Russian Government paid oil companies about 881 billion rubles in compensations. But the market turn has changed the direction of transfers: between December and January alone, companies will have to return about 47 billion rubles to the budget.

For Lukoil, the blow comes at a delicate time. In the first half of 2025, its net profit fell from 590,000 million to 287,000 million rubles. The company remains profitable, but the trend is clear and worrying.

Given this scenario, The oil company has begun to explore exits that until recently seemed unthinkable, including the sale of assets abroad. It is not alone: ​​other sanctioned Russian companies have followed the same path, pressured by a lack of liquidity and the closure of markets.

The problem is finding buyers willing—and authorized—to take the step. The Swiss company Gunvor attempted to acquire Lukoil assets, but withdrew its offer after explicit opposition from the US Treasury, which described the Russian oil company as an “instrument of the Kremlin.” The Hungarian MOL has also shown interest, although any operation would be subject to extreme political scrutiny.

The case of Lukoil illustrates a deeper change: even large private Russian companies are beginning to depend on the state to survive. The war, far from strengthening the country’s economic autonomy, is reinforcing an increasingly centralized model, where the Kremlin decides who receives financial oxygen and who is left without it.

The question is no longer whether Lukoil needs help, but how much Moscow is willing to pay to support its energy champions… and how long you can do it without breaking your own accounts.