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Bulgaria is racing to prevent the closure of its only oil refinery before US sanctions on its Russian owner come into force later this month.
Parliament In Sofia Approved legal changes that grant additional state powers to the government-appointed manager of the Lukoil-owned Burgas refinery black sea coast.
The move came after a top international commodities trader abandoned plans to buy Lukoil’s international assets as the company rejected US government allegations of being a “Kremlin puppet”.
Lukoil said it was selling its international assets in response to US sanctions aimed at prompting Russia to agree to a ceasefire in the war against Ukraine. The company has stakes in oil and gas projects in 11 countries, including the Burgas refinery as well as gas stations in several countries.
Under the new amendments, the manager is granted significant operational control of the refinery, including the right to sell its shares. Opposition lawmakers criticized the changes, saying they could take legal action against Bulgaria.
“This person will be given such extraordinary powers that, in the end, Lukoil will sue Bulgaria – and the money will end up in Russia,” said Ivaylo Mirchev, leader of the Democratic Bulgaria coalition.
The ruling coalition introduced the changes, arguing that US sanctions, set to take effect on November 21, “would effectively shut down refinery operations due to the refusal of all counterparties to make payments to Lukoil-owned companies.”
In 1999, Russian oil giant Lukoil acquired the Neftochim plant on the Black Sea. It is the largest oil refinery in the Balkans. Recent estimates by experts put the refinery’s value at 1.3 billion euros ($1.5 billion).
The Lukoil-Neftochim refinery is the largest company in Bulgaria, playing an important role in the country’s economy. Its turnover in 2024 will be around 4.7 billion euros ($5.4 billion). Its nationwide network of oil depots and gas stations, as well as supply ships and aircraft, gives it near monopoly status.
Last week, Bulgaria imposed a temporary ban on exports of petroleum products, including to other EU members, to ensure adequate domestic supplies ahead of new US sanctions on Russian energy. The ban covers exports of petroleum products, including diesel and aviation fuel.