Lukoil expects resolution of refinery situation in Bulgaria by year end
BUCHAREST. Oct 21 (Interfax) - Lukoil Bulgaria expects the situation surrounding the installation of monitoring meters at its refinery in Burgas to be resolved by the end of the year, head of the company Valentin Zlatev told Interfax.
Lukoil Bulgaria is completely following the existing law, he said. "We have all the instruments, the whole necessary system. However, the finance minister's 2010 order, which introduces additional demands to the law, does not take into account the fact that the port is an enormous complex, and we will not have time to put in place all of the specified instruments within a year. That can only be proved with the help of an appraisal," Zlatev said.
"By the end of the year, we will put all the necessary monitors in place at the refinery, but the customs regulation also includes the port, where we cannot place them any more quickly than within 1.5-two years," he said.
At the moment, the government itself understands this, so it is likely that the appropriate changes will be made, Zlatev said. "The government understands this. I think that by the end of the year they will change the relevant order, so then the court issue will be dropped," he said.
The preliminary results of the appraisal, which will be presented at the court on November 9, show that Lukoil Bulgaria could not install the required equipment at all its facilities by the designated deadline. However, if necessary, the company will press for an international appraisal, Zlatev said.
If the company is able to come to an agreement with the government, and if there will be an out of court settlement, Lukoil Bulgaria will not sue for damages connected with disruption to its operations. "If we go farther with the courts, then naturally, we will submit all claims," Zlatev said, not specifying the estimated damages.
The current situation resulted from the fact that there was a major budget deficit, which the government tried to fix by issuing the aforementioned order. "But I don't think that now anybody will shut down the factory," Zlatev said.
In addition, at the beginning of the week, Lukoil Bulgaria lowered prices on fuel by 5%. "Oil is falling - so we reduced prices," Zlatev said.
The Bulgarian Customs Service suspended the refinery's license to store fuel on July 22. The Burgas refinery is the biggest in the Balkans, encompassing the Rosenets oil terminal, and this meant the enterprise could not produce or sell fuel. The license was suspended because Lukoil had not established fuel meters needed to determine the amount of excise.
The Sofia Administrative Court suspended the Bulgarian Customs Service's ruling on August 1. It had sufficient information available to demonstrate possible damages to the accused party, including damages not accruing to repair. Another deciding factor was the fact that Lukoil had contracts to supply diesel fuel to Holding Bulgarian State Railways EAD and Sofia Public Transport Company EAD. Furthermore, according to a letter from Bulgarian Aviation Group, there are no alternative sources of aviation fuel.
On November 9, the Sofia Administrative Court will continue to consider Lukoil's case. The appraisal, whose results will be presented at that time, will establish where measuring instruments must be placed at the refinery in Burgas and the Rosenets terminal, where they are installed at the current moment, where they are lacking, and what the installation deadline is.
The refinery in Burgas, which has operated as a part of Lukoil since October of 1999, includes oil-refining and petrochemicals complexes and a plant that makes polymers. It is located 15 kilometers away from the Black Sea port of Burgas. Its design throughput capacity is 8.8 million tonnes per year. Lukoil also manages a chain of over 200 filling stations in the country, which make up 26% of the local market.
