23 Nov 2022 15:12

Bulgaria to allow Lukoil refinery to export oil products - media

MOSCOW. Nov 23 (Interfax) - Bulgaria will allow an oil refinery that belongs to Russia's Lukoil to continue to operate and export oil products to the European Union until the end of 2024, despite warnings from Brussels that this goes against sanctions policy, The Independent reported.

According to the estimates of the Bulgarian government, this will bring the country an additional 350 million euros.

"We achieved something very important: from January 1, 2023, Lukoil will transfer all production, revenues, and taxes to be paid [from the refinery in Burgas] in Bulgaria, and not, as it was before, in the Netherlands or Switzerland," Bulgarian Deputy Prime Minister Hristo Aleksiev was quoted as saying by The Independent following talks with the managers of the Russian company.

The deal is also beneficial to Lukoil, as it allows its Bulgarian subsidiary to partially avoid the EU embargo soon to go into effect on most Russian oil products. "The refinery cannot work if exports are curtailed," Ilshat Sharafutdinov, the refinery's CEO, was cited by the Independent as saying.

Bulgaria's only refinery is the main source of the gasoline and diesel fuel sold on the domestic market, although half of production goes to exports. The refinery's output accounts for around 9% of the country's GDP, and it has several thousand employees. A shutdown of the refinery would cause serious problems on the job market, as well as a loss of refining capacity.

The countries of the EU plan to introduce a ban on the transport of crude oil from Russia by sea on December 5 and on Russian oil products on February 5, 2023, if sales are higher than the price ceiling set. Bulgaria has at the same time been given the ability to authorize fulfillment of contracts concluded prior to June 4, 2022 for the purchase of oil and oil products by sea until the end of 2024. However, oil and oil products imported by Bulgaria within the framework of these exemptions cannot be sold to other members of the EU or third countries.

According to the local authorities, exports of the refinery's oil products will be Bulgarian. "The oil products derived from Urals [Russian] oil will originate from Bulgaria and can be exported," Bulgarian Deputy Finance Minister Lyudmila Petkova said recently.

According to the Bulgarian government, a ban on exports of oil products from the refinery in Burgas would damage the country's economy, as a deficit of fuel will occur on its domestic market if Lukoil's refinery ends production.

The refinery in Burgas, located on the Black Sea, has a capacity of 7 million tonnes per year. Finished products are supplied to the country and the markets of Central Europe via pipelines, rail, and road, as well as to European markets, the United States, North Africa, the Mediterranean, and Asia by sea. The refinery was launched in 1964 and became a part of Lukoil in 1999.