Bulgaria allows Russian oil refinery to export despite EU ban

Sofia, Bulgaria — Bulgaria will allow a Black Sea refinery owned by a Russian oil company to continue operating and exporting petroleum products to the European Union until the end of 2024 despite warnings from Brussels that it is against government sanctions block.

The agreement between Bulgaria and the Russian company Lukoil will give an additional boost of 350 million euros (dollars) to the Bulgarian budget, according to estimates by the government in Sofia.

“We have achieved something very important: from January 1, 2023, Lukoil will transfer all production, income and taxes to be paid to Bulgaria, and not, as was the case before, to the Netherlands or Switzerland,” said Bulgarian Deputy Prime Minister Hristo Alexiev. after talks with Russian oil company executives.

The deal also benefits Lukoil, allowing its Bulgarian plant to partly avoid an upcoming EU embargo on most Russian petroleum products.

“The refinery cannot operate if exports are reduced,” CEO Ilshat Sharafutdinov warned.

The Balkan country’s sole refinery is the main source of gasoline and diesel fuel sold on the Bulgarian market, but half of the production is for export.

It contributes about 9% of the country’s economic output and employs several thousand people. A shutdown would cause serious labor market disruptions in addition to the loss of refining capacity.

In June, the EU banned the purchase, import or transfer of Russian crude oil from December 5 and other refined petroleum products from Russia from February 5.

Bulgaria has received an exemption and can continue to import crude oil and petroleum products by sea until the end of 2024. It cannot, however, export petroleum products produced from Russian oil to Bulgaria.

The EU country’s officials say that the petroleum products it exports will be Bulgarian.

“Petroleum products derived from Ural oil will come from Bulgaria and can be exported,” Deputy Finance Minister Lyudmila Petkova said on Monday, referring to the export quality of Russian crude.

The Bulgarian government argues that the export ban would hurt the country’s economy as it will run up a deficit in its domestic market after production at the Lukoil refinery stops.