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(Bloomberg) — Bulgaria seized control of Lukoil PJSC’s local refinery to head off a potential fuel crisis from US sanctions on the Russian oil firm.
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The government in Sofia appointed Rumen Spetsov, head of the Balkan country’s tax agency, to take control of the Neftohim refinery on its Black Sea coast as well as Lukoil Bulgaria, which operates 220 gas stations in the country.
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The appointment is expected to become effective on Monday at the latest, pending registration with local trade authorities.
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Nations across Europe and the Middle East are scrambling to keep the sprawling operations of the Russian energy giant running in the face of US sanctions, which kick in on Nov. 21. The penalties, which also affect state-owned Rosneft PJSC, are aimed at cutting a major source of revenue for Russia and to pressure President Vladimir Putin to engage in peace talks over his war on Ukraine.
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Officials have said the step may open the way for a sanctions waiver that would allow the refinery to continue operating.
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Bulgaria’s priority is to ensure fuel-market stability. The 195,000 barrel-a-day refinery in Burgas is southeast Europe’s biggest such facility that accounts for 80% of the fuel in Bulgaria. Lukoil has been trying to sell it since 2023.
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The opposition has warned that the move to seize the refinery could trigger lawsuits and financial claims against the state, as it does not allow for legal and administrative appeals.
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Officials in Sofia have said they’re closely following developments in Germany, which has placed Rosneft’s unit there in trusteeship. The company, which holds shares in three German refineries, received a sanctions exemption from the US until April while Berlin looks for a buyer.
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Former Prime Minister Boyko Borissov said on Friday that Bulgaria could follow Germany in receiving a six-month extension to the US Treasury’s deadline for applying sanctions on Lukoil’s local unit. That move would give the country enough time to “calmly do anything needed,” said Borissov, who leads Bulgaria’s largest party.
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Neighboring Serbia offers a cautionary tale. The country’s sole, Russian-owned refiner, Naftna Industrija Srbije, lost oil supplies last month after several US sanction waivers expired, putting embattled Serbian President Aleksandar Vucic in a bind.
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Vucic has asked the Russian owner, Gazprom PJSC, to find a buyer but has been wary of nationalizing the company, a step that could anger Putin. Gazprom has asked the US to extend NIS’s operating license while it seeks to transfer control to a third party.
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Bulgarian authorities are prepared to sell the Lukoil refinery if no other way is found to comply with US sanctions, Economy Minister Petar Dilov said on Nov. 9. In such a case, proceeds would flow into an account that would be paid out to Lukoil once it’s no longer under US sanctions.
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—With assistance from Maxim Edwards.
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