Lukoil CEO Leonid Fedun Faces Fortune Decline Amid Sanctions

Leonid Fedun, a Ukrainian-born Russian billionaire, co-founded Russian oil company Lukoil. He served as vice president of Lukoil until retiring in 2022. Fedun was a military officer and close associate of Vagit Alekperov. His estimated fortune in February 2022 was $8.5 billion, but it declined to $1.7 billion by March 2022. Critics label Fedun as an oligarch. He previously served as president of FC Spartak Moscow before selling his shares to Lukoil.

Another Russian Energy CEO Tenders Resignation

Leonid Fedun, the vice president of Russia’s second-largest oil producer Lukoil, has resigned following the departure of CEO Vagit Alekperov. Fedun, who was co-founder of Lukoil and served as its deputy CEO since 1994, has never been sanctioned for his business activity. He has been more active as an owner of a top-tier Russian soccer club, Spartak, and has not been sanctioned for his business activity.

Fedun has never been sanctioned and may have quit the company because he is no longer associated with a private Russian energy company with assets worldwide. As of late September 2021, Fedun had a 9% share in Lukoil, while Alekperov controlled about 28%. When Alekperov quit Lukoil in April, he was believed to control directly 3% of the share while a 5.5% package through funds and trusts. It is not known exactly how much Lukoil is controlled by Fedun.

Due to sanctions, Fedun’s fortune decreased from 8.5 to 1.7 billion dollars

According to Bloomberg, the penalties caused co-owners of Lukoil, Vagit Aleksperov, and owner of Spartak Moscow, Leonid Fedun, to lose most of their wealth.

The source claims that Fedun lost about eighty percent of his money, currently valued at $1.7 billion. This amount was equivalent to 8.5 billion USD prior to the penalties.

Lukoil executive calls for voluntary cut to Russian oil production

Leonid Fedun, vice president and co-founder of Lukoil, Russia’s leading privately-held oil producer, has called for a drastic cut in the country’s oil production to take the initiative over sanctions, freezing of Russia’s foreign assets, and disconnection from Western markets and capital. Fedun proposed cutting oil production between 20% and 30% below a rate he said is currently running at around 10.5 million barrels per day, despite sanctions and other boycotts against Russian oil.

Despite widespread predictions of a steep drop in Russian oil production and exports, Russian oil exports are believed to have grown in March and April, and fallen only moderately in April. An increased frequency of Russian seaborne cargoes has been reported at export destinations in India and Asia, heavily discounted against western oil benchmarks to compensate for higher transportation and related costs. Fedun believes that Russia is likely to remain under sanctions for a long time and should adjust its economy accordingly.

With the diversion of oil exports to Asia, current large discounts may turn permanent from being just temporary, with foreign players increasingly able to fix such discounts into their terms by introducing import tariffs on Russian oil. According to Russian customs data for April, some oil cargoes from the key Russian export ports of Novorossiysk, Primorsk, and Ust-Luga were sold at below $60 per barrel. The US Energy Information Administration reported average prices for spot cargoes of Brent blend in the North Sea at almost $105 per barrel during the same period.

Fedun argued that producing less oil and selling for a higher price while disconnecting from western states would generate higher returns and require less hard currency and debt, while preserving natural resources for future generations. He also suggested that investments should now flow into creating alternative export corridors via Turkey, Iran, and Middle Asia countries.

Grounds for imposing Sanctions

a member of the board of directors of an organization that is subject to US sanctions because it has supported the Russian Federation’s actions intended to encroach on Ukraine’s territorial integrity and inviolability, overthrow the constitutional order, seize state power, and change the country’s borders

About Leonid Fedun :

• Fedun, a former soldier turned financial wizard, first became acquainted with Vagit Alekperov in the late 1980s while working as a teacher in Kogalym, Siberia.
• Fedun assisted Alekperov in the 1990s in privatizing Lukoil, which was established from elite Russian oil properties. Almost ten percent of the oil corporation is owned by him.
• In 2022, he and Alekperov both left their jobs at Lukoil.