The saga with the only oil refinery in the entire European Union (EU) owned by the Russian company "Lukoil" - the Bulgarian "Lukoil Neftekhim", which is also the largest refinery in the country, is coming to an end.
Despite international sanctions imposed on Russia due to the war in Ukraine, Lukoil continues to manage the strategically important facility, which plays a key role in energy supplies in the region. The main owner of the enterprise is the Swiss-registered company Litasco.
The Russian company itself announced at the end of 2023 that "due to significant changes in operating conditions" the "Lukoil" refinery in Bulgaria may be put up for sale. The fact is that since March 2024, Bulgaria has stopped buying oil from Russia, which until recently provided up to 90% of the country's energy supplies. In October 2024, the upcoming sale of the asset was announced by the then Bulgarian Minister of Finance, Assen Vassilev.
Who has claims to the “Lukoil“ refinery in Bulgaria?
According to a source from the PP-DB coalition, which actively insisted on establishing state control over the company, Russia is obviously interested in selling the asset exclusively to “its“ investors. For this reason, among the possible candidates for “Lukoil Neftochim“ no major players such as Shell or TotalEnergies are mentioned.
It is known for certain that the Hungarian group MOL is a candidate for “Lukoil Neftochim“. In December, Hungarian Prime Minister Viktor Orbán and Foreign Minister Péter Szijjártó visited Bulgaria. Orbán himself stated that MOL will try to obtain the asset. According to Bulgarian experts, MOL is the favorite among the candidates. However, almost nothing is known about the content of its offer.
In the meantime, another contender has appeared on the scene: In early January, the Kazakh company “KazMunayGaz“ announced its intention to buy “Lukoil Neftochim“. The company explained its interest by the desire to expand its presence on the international energy market. It already owns two refineries in Romania - Vega and Petromidia.
Asset swap?
According to Bloomberg, the deal could be worth around $1 billion, with no cash payment likely planned. Experts interviewed by DW believe the deal could include an asset swap. Askar Ismailov, director of the Kazakh company PACE Analytics, believes that “Lukoil“ could receive a stake in the Pavlodar petrochemical plant. And financial analyst Rasul Rismambetov suggests that “Lukoil“ will be offered a stake in the petrochemical plant in Atyrau, Kazakhstan.
In addition, the media have already reported interest in the refinery from a number of Bulgarian players. Among them are Plamen Bobokov, co-founder of “Prista Oil“, as well as the company “Insa Oil“. According to “Financial Times“ at the end of 2024, “Lukoil“ had requested Vladimir Putin's approval for the sale of the asset of the Oryx Global consortium to Qatari businessman Ghanim bin Saad Al Saad and the British company DL Hudson. In addition, the Ambassador of Azerbaijan to Bulgaria Huseyn Huseynov announced interest in “Lukoil Neftokhim“ from the Azerbaijani state company Socar.
What could prevent the sale of “Lukoil Neftokhim“?
The Bulgarian state owns the so-called “golden share“ in “Lukoil Neftochim“, which guarantees it access to certain information about the refinery's operations, but not the right to veto decisions on changes in ownership. In January 2023, the Bulgarian parliament amended the law so that - at least in theory - the state could take control of the company in the event of a threat to national security, public order and the supply of critical resources - by introducing a temporary management mechanism. With regard to “Lukoil Neftochim“, however, the implementation of such a mechanism is not currently under discussion.
“The government respects private property - from this point of view, the Bulgarian state cannot make decisions on the change of ownership of the plant. However, given the importance of the plant for the country's national and energy security, we are closely monitoring the process,“ said Acting Minister of Energy Vladimir Malinov in December.
Before “Lukoil“ operated in many European countries, although this was never a priority for the company. In 2014, after Russia annexed Crimea, it became clear that this part of the business of “Lukoil“ had no future.
“Lukoil“ bids farewell to Europe
In 2014, “Lukoil“ sold 240 gas stations and six oil depots in Ukraine, as well as many gas stations in the Baltic states, the Czech Republic, Slovakia and Hungary. In 2017, “Lukoil“ shareholder Vagit Alekperov explained the sale of assets in neighboring countries with “serious anti-Russian sentiments“.
However, until the start of Russia's full-scale invasion of Ukraine, “Lukoil“ still had some business in the EU. This included, for example, the large ISAB refinery in Sicily, which produced more than 20% of Italy's gasoline. However, the ban on seaborne oil supplies from Russia imposed in December 2022 paralyzed the company's activities. The authorities discussed the possibility of its nationalization, but in the end “Lukoil“ found a buyer - Cyprus-based G.O.I. Energy. Italian media suspected that this company might be connected to Russia, but this could never be proven.
„Lukoil“ still has assets in Romania and Moldova. Rumors about their sale periodically appear, but so far they have not been confirmed. Finally, along with the refinery in Burgas, the Russian company continues to own a large network of gas stations in Bulgaria. According to „Bloomberg“ „Lukoil“ would like to sell it for $ 3.3 billion, which is more than three times the amount it could get for „Lukoil Neftokhim“.
Oleg Khokhlov | Emilia Milcheva | Fariza Bolatbek