Bulgarian parliament threatens to take over control of local Lukoil

Bulgarian GERB and DPS parties have threatened to immediately cut off Russian oil supplies to Lukoil’s Burgas refinery while handing over operational control of its Bulgarian business to the government.

“We need to introduce the most liberal fuel storage regime, and the state should appoint a special representative (in Lukoil),” Desislava Atanasova, chair of the GERB parliamentary group, said on Saturday.

A Bulgarian law passed after the Russian invasion of Ukraine gives the state the right to appoint a “special commercial administrator” to take control of the Lukoil Neftochim Bulgaria refinery when there is a threat to national security.

Lukoil owns the largest refinery in the Balkans in the Bulgarian city of Burgas, and has a total monopoly on the ownership of fuel storage warehouses in Bulgaria. In the event of a temporary refinery shutdown, the state will not be able to organise the import of fuels because the company could deny access to storage facilities.

The state has the right by law to take control of Lukoil’s business for six months, which can be extended by another six months if necessary.

GERB MP Delyan Dobrev, the party’s energy expert, added that there is information from several sources that the EU derogation is being violated. He said that fuels produced by Lukoil from Russian oil are also exported to EU countries, which violates the EU sanctions regime against Russia.

The initiative to increase pressure on Lukoil was immediately supported by the co-leader of the DPS parliamentary group, Delyan Peevski, who said that the party would support GERB’s proposal.

“The vote in the National Assembly will outline very clearly whose side the parliamentary parties and coalitions are on – the side of the citizens and Euro-Atlantic ideas or the side of Lukoil, Russia and the financing of the war against Ukraine,” Peevski said. He is sanctioned by the US on the global Magnitsky Act with allegations of corruption, yet his political influence is clearly increasing.

Tax pressure against Lukoil

Peevski says that the customs and tax agency will be asked to inform the parliament about what is happening at Lukoil. “Are they circumventing the sanctions, are they paying their taxes? As part of the Euro-Atlantic majority in the National Assembly, we will insist on effective, decisive and quick actions by the executive power,” Peevski added.

GERB and DPS can hardly push the initiative through the parliament without the support of the third formation, which supports the pro-EU government in Bulgaria – We Continue the Change – Democratic Bulgaria coalition.

Government concerns

However, the Bulgarian government does not want a potential crisis in the fuel market. In August, counterintelligence presented a report to Prime Minister Nikolay Denkov, which caused alarm as it warned that ending the import of Russian oil could cause fuel prices to rise by 25 cents.

More worrying is the information about a loan of nearly $800 million granted by Litasco to its subsidiary Lukoil Neftochim Burgas, Euractiv learned from its sources. Most of the loan has been repaid, but if the waiver ends, the lender could declare the remaining $300 million in default and bankrupt the refinery.

Finance Minister Asen Vassilev commented that the parliament already decided in September on the issue of stopping the supply of Russian crude oil. However, if there is a new proposal, it will be discussed by the government.

When asked if there are disputes between the partners in power, he answered: “There are always differences between two people – regardless of whether they are in the same party or in different parties. But when we see real proposals, it will be possible to comment on something real.”

Two weeks ago, Economy Minister Bogdan Bogdanov announced that Lukoil Neftochim is expected to pay another BGN 270 million in profit tax this year.

At the same time, Bulgarian think-tank Center for the Study of Democracy (CSD) conducted several studies that showed that the suspension of Russian oil for the Burgas refinery would not cause any problems but would only stop the Kremlin’s excess profit from the Bulgarian market. It is significant that the energy expert of CSD was chosen by the government as the state’s representative in the management of Lukoil Neftochim Bulgaria.

(Krassen Nikolov | EURACTIV.bg)