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Date: 28 November 2022 Author: Grzegorz Kuczyński
Bulgaria Lets Russian Oil Refinery Export Despite EU Ban
Bulgaria’s government and Lukoil Neftochim Bulgaria have agreed that the country’s Black Sea refinery continues operating and exporting oil products to the EU until the end of 2024. This should provide a major boost to the Bulgarian budget. The deal makes Bulgaria a base for partially avoiding the European oil embargo.
The Bulgarian government and the Russian owner of Lukoil Neftochim Bulgaria have agreed to change the company’s business model and keep the profits from its operations in Bulgaria, which will seriously increase the taxes it pays. The government in Sofia intends to cancel a decree that prohibits the export of fuels produced by the Russian refinery in Bulgaria after December 5. 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 some 9 percent of the country’s economic output and employs several thousand people. In 2021 Lukoil Neftochim Burgas paid some €1.75 million in tax to the Bulgarian budget. From January 1, 2023, Lukoil will transfer all production, revenues, and taxes to be paid in Bulgaria. The deal will give an additional €350 million boost to Bulgaria’s budget. The intermediary company in the oil trade for Bulgaria is the Swiss-registered company Litasco, which is a majority shareholder in Lukoil Neftochim Bulgaria. So far, it has paid taxes in the Netherlands and Switzerland, according to Bulgarian Deputy Prime Minister Hristo Alexiev. From now on, taxes will be paid in Bulgaria. The deal also benefits Lukoil, allowing its Bulgarian facility to partially avoid an upcoming EU embargo on most Russian oil products. Once the ban is lifted, the petrochemical output will be considered EU-made, which allows for its exportation. But for that consent from the Bulgarian government, Lukoil says it will shut down the refinery.
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