In whose interest will "Lukoil" be managed - by the Bulgarian state or by the Russian company? After decades of "special relations" with the Russian owner, Radev's new government is clearly ready not to break with this model.
In 2022, President Rumen Radev and his caretaker government “made fuel cheaper” after a meeting with "Lukoil, and four years later, under sanctions, Radev's government promises a dialogue with the company about the same.
It turned out that Radev's “Progressive Bulgaria” party, which won an absolute majority (PB) has a detailed plan for what to do with the assets of the Russian “Lukoil”. If the deputy chairman of the PB parliamentary group, Slavi Vassilev, is to be believed, in addition to a dialogue with “Lukoil”, Rumen Spetsov, the special manager of the four companies of the Russian company, will be replaced, and fuel traders close to Spetsov and company will be expelled.
The former head of the National Revenue Agency was appointed as a special representative after the Bulgarian state seized the management of the “Lukoil” companies with a special law. This came about after the US sanctions against the Russian oil companies “Rosneft” and “Lukoil” - the goal was to limit the financing of the Russian war in Ukraine.
The actions related to “Lukoil” are the first concrete plan of the new government, which the public learned about from Slavi Vassilev's interview for “BG on Air”. He failed to indicate the most important thing in the future legislative program of the majority, nor did he name the “difficult decisions” that the PB is talking about. However, he was particularly talkative about “Lukoil” - without even being asked.
Who will keep the refinery?
The deputy chairman of the PB's PG is confident that the special manager appointed by the cabinet of Rosen Zhelyazkov on November 14 of last year will be replaced. He announced a course towards “pricing in the interest of the end user” and “kicking the traders out of the temple”. In his words, these are fuel traders who occupied the entrance and exit of the refinery and “Lukoil Bulgaria” EOOD – the wholesaler and owner of 217 gas stations with the “Lukoil” brand.
The Russian company is a monopolist in the wholesale fuel market and controls the aviation fuel market. Doubts have already been expressed in the public sphere that the export of “Lukoil Neftokhim” goes through certain companies close to the godfathers of the previous management. And during the six months in which he managed the refinery, Spetsov replaced – in addition to senior management, mid-level experts.
Energy expert Iliyan Vassilev described as “unrealistic” the intentions of the new government to bring “Lukoil” back into the game and predicts upheavals when replacing the special manager. ”However, the consequences could be serious if the goal is to redirect economic benefits from Delyan Peevski and Boyko Borisov to new circles of influence”, commented Vassilev on Facebook.
The work of the special manager can be controlled – both by the executive branch in the person of the Minister of Economy and the Security Council to the Council of Ministers, and by the parliamentary committee on economic policy, which should approve each of his monthly reports. If Rumen Radev's management circle has decided to replace Spetsov, it would be good to hear in parliament what he has done in the six months.
At the end of April, the acting Minister of Energy Traycho Traykov informed that the supplies to the “Lukoil Neftochim” refinery with oil are guaranteed until the end of May and partly in June. At that time, he explained that the fuel prices have also increased due to the tenfold increase in the refinery's production and logistics costs (in addition to the prices of crude oil).
Analysts are already predicting a fuel shortage in the summer due to the war in Iran and the closure of the Strait of Hormuz. Whoever the next special commercial manager is, however, the responsibility for ensuring oil supplies and guaranteeing the 90-day mandatory fuel stock lies with the executive branch.
The change of the special manager is not just a personnel decision, but a change of the figure who, by law, holds operational control over the assets of “Lukoil” and signs a future deal for their sale. The expanded powers of the special manager were approved last fall, and then the opposition expressed concerns that the leader of the MRF, Delyan Peevski, who was sanctioned for corruption, would take control of the refinery. According to GERB leader Boyko Borisov, all actions were coordinated with the European Commission, the US Office of Foreign Assets Control (OFAC) and the US Department of Energy.
The threat of arbitration
The television interview of Slavi Vassilev, already a factor of “Progressive Bulgaria”, also revealed the readiness of the new government to protect Russian interests, in this case Russian property - “the Russians should not worry that they will seize their asset”. Phrases like “we will take care of this asset like a good manager” showed a high degree of political commitment to the interests of the sanctioned owner, who has been saving himself from paying profit tax for years in the Bulgarian budget.
The promise of the “good manager” comes against the backdrop of the Russian oil company's request that it will file an arbitration case over the appointment of the special manager and the terminated concession of the “Rosenets” port. At the end of February, the Swiss company of “Lukoil” - “Litasko”, demanded from Bulgaria an amicable solution to the problem, otherwise - a lawsuit.
We will do everything possible to avoid arbitration, Slavi Vassilev also said. Perhaps the future Prime Minister Rumen Radev will also seek an “amicable solution”. In September 2022, as head of state, he met with the president of the Russian company Vadim Vorobyov (replaced due to US sanctions). After the meeting, which was announced at the last minute, Radev credited his caretaker cabinet, which has been in power for about thirty days, for the reduction in fuel prices.
But in fact, two months earlier, Prime Minister Kiril Petkov (“We continue the change”) negotiated a derogation with the European Commission that exempted Bulgaria from sanctions against Russia and allowed it to import Russian oil by sea until the end of 2024. However, the exception ceased to operate three months earlier with a decision of the National Assembly.
By the way, as President Rumen Radev had expressed indignation at the special trade manager and his expanded powers. When Spetsov was appointed, he asked where the legally required 6-month plan was, which he must present to the Security Council of the Council of Ministers. "This is an activity that is in its infancy in violation of the law and there is a huge risk that it will lead to absolute violations of the law," the head of state said at the time.
Will there be a deal with “Carlisle”
The Bulgarian series with “Lukoil” is developing in the context of the upcoming deal for the foreign assets of one of the largest Russian companies. The reason is that “Lukoil” is under American sanctions and is forced to sell. In January, it announced an agreement for a deal with the American investment fund “Carlisle”, which would receive the majority of assets abroad (including Bulgarian ones), valued at $22 billion.
However, the Hungarian company ΜΟL was interested in the Burgas refinery, which became clear after a meeting between Hungarian Prime Minister Viktor Orbán and President Radev in December 2024. A month later, during a visit to Bulgaria, Hungarian Economy Minister Márton Nad confirmed this interest. Is a separate deal for the Bulgarian assets outside the large sale possible? The answer to this question is not in Bulgaria.
Recently, the US extended the operating license of the four “Lukoil” companies until October 29 in order to ensure energy security and avoid a fuel crisis. But the special commercial manager must negotiate any action with OFAC, which puts the management of the assets under constant surveillance.
The question is not only who will own the refinery, but in whose interest it will be managed - the Bulgarian state or a Russian company, placed under sanctions because of Russia's war. After decades of “special relations” with “Lukoil”, the new government of Rumen Radev seems ready not to break with this model.
This text expresses the opinion of the author and may not coincide with the positions of the Bulgarian editorial office and the State Department as a whole.