Russia’s Lukoil tried to enter the grain trading market, but the project was thwarted by US sanctions

Russia’s Lukoil tried to enter the grain trading market through Dubai last year, but the plan quickly fell through due to U.S. sanctions against the Russian oil giant, Bloomberg sources familiar with the situation told Bloomberg.

According to the interlocutors, the project involved the creation of Teruva FZCO and the hiring of several senior traders to work with grains last summer.

However, the implementation of the plan became more difficult after the United States announced sanctions against Lukoil in October as part of a new package of measures aimed at ending Moscow’s war against Ukraine. The sanctions made the business unviable, as they complicated banking transactions and working with counterparties. As a result, Teruva was closed late last year before trading activities began, the sources noted.

The sanctions against Lukoil increased pressure on the company on a global scale. It agreed to sell most of its international assets, while its trading arm Litasco cut staff and closed some operations, including in the Middle East. Lukoil and its subsidiaries have traditionally focused on oil, gas and petroleum products, so entering the agricultural sector would be an atypical move for the company.

The Dubai-based Teruva was overseen by Chingiz Aliyev, the sources said, and Omar Dbab was named head of trading. In October, Dbab was listed as representing Teruva at a commodities conference in Berlin. According to his LinkedIn profile, he was a senior trader at Louis Dreyfus Co. in Geneva before joining the company in June.

Leandro Racedo has also been hired, the sources said. He previously worked as a trader at Al Ghurair Investment LLC, Hartree Partners LP and Bunge Global SA. His LinkedIn profile listed him as Lukoil’s senior agricultural trader in Dubai.

In December, Aliyev was placed under sanctions by the UK. The sanctions notice noted that he works as a director or in a similar position at companies of strategic importance to Russia — Litasco Middle East DMCC and Litasco SA.

Tags: Russia, grain, trading