Commission warns Bulgaria not to circumvent EU oil sanctions – EURACTIV.com

The The Russian company LukoilOwner of Bulgariais the only refinery, shouldn’t try to bypass the EU embargo and selling oil products made from Russian oil abroad, a spokesperson for the European Commission told Bulgarian journalists in Brussels.

Feespokeman Daniel Ferry said Bulgaria was exceptionally granted the right to use Russian oil until 2024, but this does not mean that it can export and take advantage of the exception.

Ferry explained that tthe object of the exception has been so that Bulgaria can use internally but not resale abroadimported from Russiawhether in the EU or to third countries.

Ferry explained that Bulgaria has obtained the right to use Russian oil by exception until 2024, but this does not mean that it can export and profit from it. “The purpose of the exception is that Bulgaria can source and not sell imported Russian oil to other countries – from the EU or from foreign countries,” the spokesperson added.

He appeared to be reacting to a statement from the Bulgarian energy minister who said the day before that the export of Russian petroleum products was make a foster at the entire European market and has been guaranteeing the security of the region. He too said that the European Commission has approved the resale of Russian fuels.

A proposal to lift the ban on reselling Russian oil was tabled a week ago by interim Prime Minister Gulab Donev and finance, economy and energy ministers, who all argued that the export ban would lead to a deficit on the domestic market. , as the Bulgarian refinery of the Russian company Lukoil would also stop production.

The previous government of Kiril Petkov imposed the export ban at the end of June to comply with common European decisions and to help reduce fuel prices in Bulgaria. The logic is that the more oil there is in Bulgaria, the more its price will fall because the commodity cannot be sold elsewhere.

However, last week the caretaker The prime minister and three ministers tabled proposals to lift the ban, arguing that the export ban would lead to a deficit in the domestic market, as Lukoil would also stop producing for the domestic market. The motivations for this strange proposal remain obscure.

The decision of the interim government would be particularly beneficial for both Lukoil, which exports fuels through the group’s trader – Swiss-Litasco and for Bulgarian companies importing Russian fuels.

The Burgas refinery is running nearly 90% on Russian oil from the Urals, which is priced around $23-$25 a barrel cheaper than European benchmark Brent, which has fallen below $100 a barrel. barrel since March and is trading at levels of $93-97. The price difference of 20 to 25% allows him to generate significant income.

The caretaker government’s proposal, signed by Prime Minister Gulab Donev and finance, economy and energy ministers, comes as European countries prepare action plans after Russia’s oil shutdown in December – and after its termination and the import of petroleum products from Russia from February 5, 2023.

Germany, for example, nationalized the Rosneft refineries, which hold almost 12% of oil processing capacity. And the Italian authorities are looking for ways not to close the Lukoil refinery in Sicily – ISAB, which holds 20% of the oil processing capacity and 1,000 jobs.

Reports suggest that US investment fund Crossbridge Energy Partners is in talks to acquire it, and the government is trying to secure financing for the plant to buy non-Russian raw materials. If the deal is successful, Litasco, which operates four refineries in Russia, three in Italy, Bulgaria and Romania, and owns 45% of a refinery in the Netherlands, will be left with one less.

Reuters recently reported that Litasco plans to move some of its business operations to Dubai.

A week ago, the caretaker government announced its proposal to cancel the ban on the export of products from the Lukoil Nefto refineryhI’m close to black Se city of Bourgas introduced by the previous government after December 5th.

Difficulties in European markets will allow the Bulgarian branch of Russia’s largest private company, such as Lukoil, but also local companies, such as Insa Oil, to have good profits, including and via sales in Ukraine, where Bulgaria exported more than €700. million dollars of diesel fuel this year only.

(Krassen Nikolov | EURACTIV.bg)

Aurora J. William