0734GMT//Lukoil's problems mount; have Putin and Lavrov had a tiff?; the Kremlin tries to plug its labour gap

LUKOIL'S PROBLEMS: Gunvor, the Switzerland-based trading company, abandoned its $22 billion takeover of Lukoil's foreign assets after the US described it as "a Kremlin puppet". These sanctions come into force on Nov. 21. (COMMENT>> This scuppers the Kremlin's attempts to skip around the extra sanctions imposed on Lukoil by the US last month. Lukoil’s global holdings include refineries in Bulgaria and Romania, around 2,000 gas stations across Europe and the US and oil and gas projects in Kazakhstan, Iraq, Mexico and Uzbekistan. The impact of the sanctions has been huge, with companies across the world now refusing to deal with Lukoil because of the risk of secondary US sanctions.)

• Bulgaria on Friday proposed a legal challenge to nationalise a major Lukoil refinery in Burgas. The Neftochim plant is the largest oil refinery in Bulgaria. The Bulgarian government has said that US sanctions will effectively close the refinery because clients will refuse to buy Lukoil's refined products. (COMMENT>> The refinery is Bulgaria's single biggest industrial asset, with a turnover of $5.4 billion in 2024.)
• Romanian lawmakers have also proposed taking control of Lukoil assets in the country. These include the country's third-largest oil refinery and 320 petrol stations.
• Brazil has cut the amount of refined diesel it buys from Russia because of the threat of secondary sanctions. It had been one of Russia's biggest diesel imports, buying in around 60% of its total from Russia. Now this has dropped to 17%, according to reports.
• Indian and Chinese buyers of Russian oil have stopped imports. India has reportedly started to talk to the UAE and Saudi Arabia about buying their oil instead of oil from Russia.
• Iraq's biggest oil field has reportedly stopped operations because of the US sanctions. Based near Basra, West Qurna-2 is one of the world's largest oilfields and Lukoil's most important overseas asset.
• Azerbaijan, so integral to Russian oil and gas processing plans since its invasion of Ukraine in 2022, has now stopped taking Russian shipments from its Caspian Sea fields.
• Russian oil tankers are moored outside ports in the Red Sea and the Baltic because US sanctions have scared buyers off.
• Russia is now selling its oil at a record discount because of the extra sanctions imposed on Lukoil, traders have said.
• The IEA says that Russian oil production will drop by 1 million barrels a day within a decade because of international sanctions. This is around 8% of total production.

HAVE PUTIN AND LAVROV FALLEN OUT?: The Kremlin on Friday was forced to dismiss rumours that Vladimir Putin has fallen out with Sergei Lavrov, his longtime foreign minister. Lavrov was missing from a Security Council meeting last week in which Putin ordered his military to potentially resume testing nuclear weapons for the first time since the end of the Cold War. The Kommersant newspaper reported that Lavrov had been excused from the meeting. (COMMENT>> It is highly unusual for the Kremlin to react to rumours about senior government officials, especially as most of the speculation over Putin's relationship with Lavrov emanated from Western media. Lavrov and Putin have always had a strained relationship. Lavrov is far more of an urbane technocrat than a dogmatic Putin believer. Media reports have said that Putin was unhappy with Lavrov for failing to secure a meeting with Donald Trump last month in Budapest. Kremlin sources have said that Lavrov's uncompromising demands ahead of the meeting had scuppered it.)

MOBILE INTERNET CUT PERMANENTLY IN RUSSIAN REGION: Ulyanovsk in central Russia has become the first region to permanently switch off mobile internet to reduce the chance of Ukrainian drone strikes. The blackout is being imposed around military and government areas in the region. It will affect neighbouring residential areas. (COMMENT>> This has been coming. The Kremlin has simply been unable to stamp out the successful Ukrainian drone strikes. It has deployed reservists to defend against them and irregular mobile internet blackouts, but nothing has worked.)

RECRUITING RESERVISTS: At least 20 Russian regions have now started recruiting reservists into units to guard strategic sites, factories and refineries against Ukrainian drone attacks. (COMMENT>> Putin only signed laws allowing reservists to be directly recruited into defence units a week ago. The Kremlin is desperate to stop the attacks. Sources have said that the order to form defence units from reservists was designed to avoid a mobilisation that spooked the Russian public in September 2022.)

DOCTORS MUST WORK IN STATE SYSTEM: Russia's lower house of parliament passed a law on Tuesday requiring graduate doctors to work in state-run hospitals and clinics for at least three years. Graduates who refuse will have to refund their state-sponsored education and pay a 200% fine. (COMMENT>> Russia's healthcare system is teetering on the edge of collapse. This is seen as an emergency stopgap action to avert this collapse.)

WORKER DEAL WITH INDIA LINED UP: Vladimir Putin will sign a deal with Indian PM Narendra Modi when he visits in December to persuade more Indian workers to head to Russia. (COMMENT>> Again, this is part of the Kremlin's attempts to import labour to plug gaps caused by its invasion of Ukraine. The irony is, at least partially, that the Kremlin has been toughening restrictions on labour from Central Asia while trying to attract more workers.)