Lukoil mulls sale of Bulgarian refinery, petrol stations

Lukoil mulls sale of Bulgarian refinery, petrol stations
Lukoil operates the Neftochim Burgas refinery and a chain of petrol stations in Bulgaria. / Lukoil
By Denitsa Koseva in Sofia December 5, 2023

Lukoil said on December 5 it will reassess its presence in Bulgaria and could sell its business in the country due to “significant change in conditions” for operating on its territory.

The statement comes after in November the Bulgarian parliament decided to ban the import of Russian oil as of March 1 next year. Previously, the country was granted an exemption to an EU-wide ban on imports of Russian oil until the end of 2024 to give time to the Neftochim refinery to adjust its equipment to other types of oil.

“Considering the significant change in the conditions for carrying out the activities of the companies of Lukoil Group on the territory of Bulgaria, the company has started work on reviewing its strategy regarding this asset. With the help of international consultants, various options will be analysed, including the sale of the business,” Lukoil said in a press release.

“The revision of the strategy is a consequence of the adoption by the state authorities of Bulgaria of discriminatory laws and other unfair, biased political decisions against the refinery, which have nothing to do with either the civilised regulation of big business or the increase in the revenue side of the country's budget,” it added.

Lukoil also accused Bulgaria of creating an artificial storm around a major international company that is not under sanctions by the EU or the US, and claimed it is fulfilling all its obligations to the Bulgarian state.

Information that Lukoil could sell its refinery and petrol filling stations in Bulgaria was first provided by Bulgarian Finance Minister Assen Vassilev in mid-October but was denied at the time by the Russian company. Back then, Lukoil said that Litasco SA, the Swiss-based trade unit of Russian Lukol, which is the main shareholder of Lukoil Neftohim Burgas AD, has not received any offers to sell the refinery.

Following Lukoil’s December 5 statement, Delayn Dobrev, the head of parliament’s energy committee, said he expects workers at the refinery – the largest in the Balkans – to stage protests.

"I do not rule out that in the coming days they will try to provoke protests and the closure of highways again," Dobrev said as quoted by Dnevnik news outlet.

"There was a short protest by Neftochim Burgas 1-2 months ago. I expect this kind of protest to be repeated,” he added.

Meanwhile, Vassilev said that possible sale of Lukoil’s business in the country does not pose a risk of the refinery having insufficient fuels, as the government already knew the company is preparing a sale. Vassilev added that the refinery’s operations should be secured with the appointment of a state representative.

Also on December 5, Gerb and the Movement for Rights and Freedoms (DPS) said they want the parliament to ban imports of Russian oil as of January 1, 2024, not March 1 as currently decided.

Bulgaria was allowed to import Russian oil for the refinery until the end of 2024. In October, Gerb proposed an immediate end of the derogation, but the parliament decided to give the refinery time to adjust its equipment to work with non-Russian oil.