Bulgaria unaware of possible Russian deal for the largest refinery in Balkans

Sofia: The Bulgarian government has no information on the deal reportedly being prepared by Russian oil company Lukoil for the sale of the Burgas oil refinery, a strategic asset for the entire Balkan region, it said on Wednesday.

Earlier, the Financial Times reported that Lukoil was planning to sell the refinery in Bulgaria, its largest asset in the Balkans, to a Qatari-British consortium. The company announced its intentions in a letter to Russian President Vladimir Putin, who must approve the deal.

The FT reports that Lukoil has chosen a consortium consisting of Oryx Global, controlled by Qatari businessman Ghanim Bin Saad Al Saad, and London-based commodities trading house DL Hudson. Euractiv’s sources in Sofia confirmed the letter’s existence.

On Wednesday, Bulgarian caretaker Energy Minister Vladimir Malinov said he had learned of the prepared deal from the media reports.

“We have not been informed by the majority shareholder in Lukoil Neftochim Burgas, nor by the operational management at the refinery, nor by the state representative on the company’s supervisory board,” said Malinov.

He announced that the government would thoroughly analyse how the sale would affect the fuel market in Bulgaria, but only after receiving official information.

The government owns a “golden share” in the refinery, a key asset in the region’s fuel market. Sofia institutions also have legal mechanisms to block the sale of the refinery, as it is a strategic asset that can be temporarily seized by the state if the government decides that the deal threatens national security.

According to the letter sent to Putin’s office, Azerbaijan state energy company Socar, Kazakh state energy group KazMunayGas, and Turkey’s oil company Opet were also in the final round of candidates.

Martin Vladimirov, a leading energy analyst at the influential think tank CSD, told Euractiv that “laundering of Russian assets by the transfer of these assets to individuals close to the Kremlin” may be being prepared.

“According to my unofficial sources, Russian quasi-state institutions are involved in this transaction. The deal relies on initial approval from the Bulgarian state. There are conditions for the transaction that are not known, such as how this asset will be used in the future,” Vladimirov added.

He commented that the leaked letter from Lukoil to the Putin administration favours players who are not oil market players but financial funds.

“Lukoil chooses to play with proxy players instead of the three major players cited in the oil market, with whom they have very close commercial and financial relations – Socar, Opet and KazMunayGas,” commented Vladimirov.

According to him, it is very unlikely that the deal, which is currently being prepared, will be completed by the end of the year if the Bulgarian authorities use all available regulatory mechanisms for review.