Svetoslav Todorov, Marian Chiriac and Katarina BaleticBelgrade, Bucharest, SofiaBIRNNovember 12, 202512:47As US sanctions on the Russian energy giant start to bite, Bulgaria and Romania are hurrying to find new owners for its operations in their countries, while neighbour Serbia also seeks to guarantee fuel supplies.
Lukoil’s central office in Sofia, Bulgaria, December 2023. Photo: EPA/VASSIL DONEV.
Bulgaria is amending laws to escape US sanctions on Russia that go into force on November 21, allowing its authorities to seize the Russian-owned Lukoil oil refinery in Burgas and sell it.
“We have a contender and one that’s been coordinated with all our partners,” Boyko Borissov, leader of GERB said on Wednesday. GERB is currently in a coalition government with the nationalist There’s Such a People and the pro-Russian Bulgarian Socialist Party, with the support of New Beginning, the party of tycoon Delyan Peevski.
Bulgaria decided on November 7 to go after Lukoil’s refinery in the Black Sea town of Burgas and impose an external administrator.
This move came after the US on October 22 froze the US-based assets of Russia’s two biggest oil producers, Rosneft and Lukoil, and threatened secondary penalties for foreign entities engaging with them. The Trump administration has imposed the sanctions over frustration with Vladimir Putin’s refusal to end Russia’s war against Ukraine.
The US sanctions could pose a risk to Bulgaria’s oil reserves: the Burgas facility, established in 1998, supplies more than two-thirds of Bulgaria’s domestic fuel.
However, both the media and opposition have questioned the very swift way the law amendments were accepted. The energy commission located next to the parliament gathered and accepted the amendments to the Law on the Administrative Regulation of Economic Activities Related to Oil and Oil Products in just 26 seconds.
This development has encouraged speculation that the refinery will be given to a government-friendly figure – and is a missed opportunity to challenge the oil monopoly in the country. Opposition politicians have claimed that many of them were not aware that such a meeting was taking place, while others got wrong information on when it would be held.
Under the proposed changes, an external administrator will oversee the refinery’s sale to a new buyer – one not bothered by inheriting US sanctions. One interested party, Swiss company Gunvor, already backed out of a supposed deal after the US Treasury last Thursday called the company a “Kremlin puppet”.
“It’s up to the President to veto or accept the law,” Borissov added on Wednesday. He criticised the government for acting too late and for only now trying to find an escape option.
Atanas Atanasov, MP from the opposition Democratic Bulgaria party, also accused the government of ineptitude. “For so many years, the state was inactive over this Russian enclave, but what exactly are they doing now, I’m only reading from the media … these are all very chaotic moves,” Atanasov said on Monday.
The impending takeover of Lukoil assets has alarmed Russia’s ambassador to Sofia, Eleonora Mitrofanova. “It looks like a measure for the property’s expropriation. The Bulgarians are acting very riskily, they are creating a dangerous precedent,” Mitrofanova told Russia’s TASS news agency on Tuesday. There was silence from the Lukoil management and Russia itself.
On October 31, Bulgaria temporarily suspended exports of diesel and aviation fuel, including to EU markets, to prevent shortages resulting from sanctions.
Bulgaria stopped importing Russian crude oil in March 2024 after a gradual phase-down, shifting to alternative sources from Kazakhstan, Iraq and Tunisia, but still through Lukoil.
Romania rushes to secure fuel supplies
Romania is also racing to prevent Lukoil’s operations in the country from shutting down before US sanctions targeting the company take effect on November 21.
Energy Minister Bogdan Ivan said on Tuesday that Romania “must take control” of Petrotel Ploiesti, the Romanian subsidiary of Lukoil, to ensure the stability of the energy system, enforce international sanctions, and protect jobs.
“The Energy Ministry is working together with all relevant authorities to draft legislation that will, on the one hand, ensure full compliance with the US sanctions regime, and on the other, guarantee the continuity of Petrotel’s refining activities and the sale of petroleum products, without jeopardising the country’s fuel supply,” Ivan wrote on Facebook.
Lukoil operates 320 petrol stations in Romania and a refinery, which is the country’s third largest and holds offshore exploration rights in the Black Sea area. Ivan did not specify which assets the state intends to take over.
The minister also said that Romania will not seek an extension of the November 21 deadline set by US authorities and will instead support the “coordinated enforcement of US-initiated sanctions across the European Union”.
Serbia scrabbles to save domestic oil company
In parallel with developments in Bulgaria and Romania, Serbian officials are desperately seeking to avoid the potentially crippling impact of US sanctions on the country’s oil company NIS (Naftna Industrija Srbije), which is partly owned by Russian companies Gazprom Neft (44.85 per cent) and JSC Intelligence (11.3 per cent).
Serbian Minister of Mining and Energy Dubravka Djedovic Handanovic said on Tuesday that the Russian majority owners sent a request to the US Treasury Department’s Office of Foreign Assets Control requesting an extension of NIS’s operating licence while “negotiations with a third party” for its sale continue.
“The request states that the Russian side is ready to cede control and influence over the company NIS to a third party,” Handanovic wrote on Instagram.
Meanwhile sanctions on Lukoil could make the Serbian energy situation even worse. Lukoil in Serbia is the second biggest owner of petrol stations, after NIS, operating 112 outlets. NIS and Lukoil together accounted for almost one-third of the total retail motor fuel market in Serbia in 2024.
Source link: balkaninsight.com
