On Friday, Bulgaria’s parliament approved legal amendments aimed at placing a significant Lukoil refinery in the eastern part of the nation under state control, a move prompted by U.S. sanctions against the Russian oil company.
Last month, the United States imposed restrictions on Russia’s two largest oil producers, Rosneft and Lukoil, as a response to its military actions in Ukraine.
Lukoil has owned the Neftochim facility, which is the biggest oil refinery in the Balkans and is located in Burgas on the Black Sea, since 1999. The Lukoil-Neftochim enterprise is also the largest company in Bulgaria.
The U.S. sanctions, set to take effect on November 21, “will essentially result in the cessation of the refinery’s operations… because all business partners will refuse to conduct transactions with companies linked to Lukoil,” stated the proposed legislation from Bulgaria’s governing coalition.
As per the new laws, a special administrator may be appointed to exercise voting rights on behalf of the shareholders. This administrator could also sell shares to a new owner, subject to government consent.
The legislation was expedited through parliament, receiving approval from a majority of the lawmakers.
During discussions, opposition members accused the bill’s proponents of hastily passing the legislation.
They criticized the special administrator’s authority to sell the refinery’s shares, arguing that this could result in legal repercussions for Bulgaria.
Ruslan Stefanov, an energy governance and security specialist at the Center for the Study of Democracy, noted that while the government’s strategy is a move in the right direction, it is also “risky.”
“Keeping the option for nationalization open—though the intent to exert greater control is understandable—is highly precarious and could diminish the effectiveness of the sanctions, potentially allowing Lukoil to sue the Bulgarian government for significantly greater damages,” Stefanov informed AFP.
Last week, Bulgarian legislators enacted temporary export restrictions on petroleum products, including those shipped to other European Union nations, to ensure an adequate supply following American sanctions on Russian energy.
The ban encompasses the export of petroleum products such as diesel and aviation fuel.
However, exceptions will be made for the refueling and loading of both local and foreign vessels and aircraft, as well as for supplies supplied to NATO forces or any EU member state’s military, provided they are related to the bloc’s collective security and defense policy.
The Lukoil-Neftochim refinery plays a pivotal role in Bulgaria’s economy, reporting a revenue of approximately 4.7 billion euros ($5.4 billion) in 2024.
Its distribution division holds a near-monopoly in the Bulgarian market, managing a network of oil storage facilities, gas stations, and companies servicing ships and aircraft.
