Why OFAC Issued GL 131G

On October 22, 2025, OFAC designated Public Joint-Stock Company Oil Company Lukoil as part of a broader campaign to degrade Russia’s energy revenues and its capacity to finance the war. At the same time, OFAC recognized the practical reality: Lukoil holds substantial assets outside of Russia, and an orderly divestiture of those assets to non-blocked buyers serves U.S. policy objectives by cutting off a future source of revenue for the Kremlin. To enable that process, OFAC has issued a series of general licenses – GL 131A through GL 131F – and on June 25, 2026, issued OFAC GL 131G, extending the authorization through July 25, 2026.

What OFAC GL 131G Authorizes

OFAC GL 131G contains two separate authorizations.

The first authorizes negotiations and entry into contingent contracts with Lukoil or any of its affiliates for the sale, disposition, or transfer of Lukoil International GmbH (LIG) or any entity in which LIG holds, directly or indirectly, a 50 percent or greater interest (collectively, “LIG Entities”). According to FAQ 1224, authorized activities include negotiations on the terms of definitive agreements, financial, legal, and operational due diligence, and engagement of outside counsel or advisors.

The second authorizes maintenance and wind down of operations, contracts, and other agreements of all LIG Entities, also through July 25, 2026. In fact, it confirms that ordinary-course business activity is covered, including supply of motor fuel and lubricants; lease and insurance payments; employee payroll, benefits, and severance; information technology services; legal services; payments to suppliers, landlords, lenders, and partners; and intracompany transfers consistent with pre-existing practices.

Contingent Contracts: What This Means in Practice

OFAC GL 131G does not authorize the actual sale. Any contract entered into under the license must expressly condition its performance on the receipt of a separate specific license from OFAC. The term “contingent contract” is defined broadly in the license itself: it includes executory contracts, pro forma invoices, agreements in principle, bids and proposals submitted in response to public tenders, and binding memoranda of understanding. Accordingly, the parties may negotiate and document a deal before July 25, 2026, but closing requires a further OFAC authorization.

Ongoing Maintenance and Wind Down: GL 131G and GL 128C

OFAC GL 131G should be read alongside GL 128C. Both licenses authorize ordinary-course transactions with LIG Entities, but they serve different purposes and carry different expiration dates. GL 128C was issued specifically to protect retail consumers. It covers a narrow set of LIG entities (Lukoil automobile service stations outside Russia) and runs through October 29, 2026. OFAC GL 131G covers all LIG Entities and expires July 25, 2026. Where an activity falls within the scope of both licenses, either may be relied upon.

What OFAC Will Require to Approve a Transaction

FAQ 1224 sets out the minimum conditions OFAC will apply when evaluating a specific license application to effectuate a sale. First, the transaction must completely sever LIG’s ties with Lukoil. Any structure preserving Lukoil’s influence over the divested assets is excluded. Second, any funds owed to Lukoil must be blocked in an account subject to U.S. jurisdiction until sanctions are lifted. Third, the transaction must not provide an upfront windfall to Lukoil, whether through prepayment, asset swaps, or share swaps. In addition, as a condition of any future closing license, OFAC expects to require that buyers of LIG assets seek OFAC review before any further material divestment.

Non-U.S. Persons: Does the License Apply?

FAQ 1225 addresses this question directly. Non-U.S. persons generally do not face exposure under E.O. 14024 for engaging in transactions with blocked persons that are generally authorized for U.S. persons, including those authorized by OFAC GL 131G and GL 128C. Non-U.S. financial institutions may also rely on OFAC GL 131G regardless of whether they maintain blocked accounts of LIG Entities, provided no funds are transferred to any person or account located in Russia.

Expiration and Revocation

OFAC GL 131G is effective as of June 25, 2026, replaces and supersedes GL 131F dated May 28, 2026, and expires at 12:01 a.m. eastern daylight time on July 25, 2026. OFAC retains the right to revoke the license at any time, including if Lukoil and LIG fail to engage in good-faith negotiations regarding the divestment of LIG or its assets. For companies and investors interested in acquiring LIG assets, the window to negotiate and enter into contingent agreements is narrow. Given the complexity of sanctions compliance and the conditions OFAC has outlined for any future closing license, we recommend consulting a U.S. sanctions attorney before taking any steps under OFAC GL 131G.