Laugfs Gas suspends Dubai unit after US sanctions

• Assures no disruption to local LPG supply

By Nishel Fernando

Laugfs Gas PLC announced on Monday its decision to temporarily suspend all commercial operations of its Dubai-based subsidiary, SLOGAL Energy DMCC, following its designation on a sanctions list by the US Treasury.

Despite the gravity of the international sanctions, Laugfs assured the public that its domestic liquefied petroleum gas (LPG) supply would not be affected and its stock price paradoxically climbed at the Colombo Stock Exchange (CSE).

In a corporate disclosure filed with the CSE, Laugfs Gas addressed the October 9 announcement by the US Department of the Treasury’s Office of Foreign Assets Control, which placed SLOGAL Energy DMCC on its Specially Designated Nationals (SDN) list. The company’s stock price closed Monday’s trading at Rs.53.00, up 70 cents or 1.34 percent.

Laugfs Gas PLC categorically stated that its subsidiary “has never knowingly engaged in or facilitated, any trade involving sanctioned entities or products of sanctioned origin”. The company maintained that all of SLOGAL’s commercial transactions were conducted in line with international trade practices and supported by documentation such as Certificates of Origin and Know Your Customer (KYC) verifications.

In response to the designation, the board of directors has taken immediate action by temporarily suspending all commercial operations of SLOGAL Energy DMCC, initiating an independent legal and compliance review led by prominent US sanctions counsel and planning to submit a petition for exclusion to have SLOGAL removed from the SDN list at the earliest opportunity.

Crucially, the company emphasised that this development has no impact on the domestic operations of Laugfs Gas PLC. It clarified that SLOGAL primarily functions as a “trading arm for re-export operations of LPG” and its temporary suspension does not affect local sale and distribution, which continue normally. The US Treasury’s action was part of a broader move to dismantle what it called “key elements of Iran’s energy export machine”. According to the Treasury’s press release, SLOGAL Energy DMCC played a “key role in enabling the sale and shipment of Iranian LPG to Sri Lanka”.

The US Treasury alleges that between 2024 and 2025, SLOGAL purchased Iranian LPG that was delivered to Sri Lanka, with some shipments also reaching end users in Bangladesh. The press release specifically named two vessels, MAX STAR and GAS DIOR, as having delivered Iranian LPG purchased by SLOGAL in 2024 and 2025, respectively.

The sanctioning marks a significant event for corporate Sri Lanka. Dushyantha Perera, a Partner at Sudath Perera Associates, noted in a social media post that “This appears to be the first time an affiliate of a Sri Lankan conglomerate has been sanctioned under the US SDN regime.”

Being placed on the SDN list effectively freezes all of SLOGAL’s US dollar assets and cuts it off from the US banking system, a move Perera described as a potential “death-knell” for the subsidiary.

The action against SLOGAL could also create “reputational or compliance headwinds” for the parent company, Laugfs Gas. This is particularly relevant as LPG imports rely heavily on international financial instruments like Letters of Credit. The situation is further complicated by the recent high-profile acquisition of a 50 percent stake in Laugfs Gas by billionaire businessman Dhammika Perera, a development also highlighted in the social media analysis.