Key Points
- Bulgaria is trying to prevent its only oil refinery from shutting down due to upcoming U.S. sanctions on its Russian owner, Lukoil.
- The Bulgarian parliament has given a government-appointed manager more control over the refinery, including the power to sell its shares.
- The move follows the collapse of a deal for an international trader to buy Lukoil’s assets.
- The ruling coalition says the sanctions, effective November 21, would force the refinery to close without government intervention.
Bulgaria is racing against the clock to prevent its only oil refinery from shutting down before U.S. sanctions on its Russian owner, Lukoil, take effect later this month.
The Bulgarian parliament in Sofia passed new legislation that gives more power to a government-appointed manager at the Lukoil-owned Burgas refinery. This move comes after a top international commodities trader backed out of a deal to buy Lukoil’s international assets.
Lukoil said it was selling its international assets due to U.S. sanctions aimed at pressuring Russia to agree to a ceasefire in its war against Ukraine.
The new rules give the manager significant operational control over the refinery, including the right to sell its shares. Some opposition lawmakers criticized the changes, warning that they could lead to Lukoil suing Bulgaria.
The ruling coalition, however, argued that the changes were necessary. They said the U.S. sanctions, which start on November 21, “will effectively lead to the shutdown of the refinery’s operations” because other companies will refuse to pay Lukoil-owned businesses.
The Lukoil-Neftochim refinery is the largest oil refinery in the Balkans and a huge part of Bulgaria’s economy. With a nationwide network of oil depots and gas stations, it has a near-monopoly in the country.
Last week, Bulgaria also imposed temporary restrictions on the export of petroleum products, including diesel and aviation fuel, to ensure sufficient supplies for itself ahead of the new U.S. sanctions.
