site.btaUPDATED LUKOil, Experts Divided over Ease of Bulgaria's Divorce with Russian Oil

Bulgarian energy experts and LUKOil are divided over the ease of Bulgaria's parting with Russian oil. The head of the managing board of LUKOil Neftochim Burgas, which is the only oil refinery in Bulgaria, told reporters that if Russian oil deliveries stop, his oil refinery will immediately have a problem. Energy expert Vasko Nachev explained that there is no problem for the refinery to work with oil which is not Russian. Hristo Kazandjiev from the Bulgarian Energy and Mining Forum said that it will be an abuse of market dominance if the refinery stops operating due to discontinuing of Russian oil supplies.

Here is what more they said:

LUKOil Neftochim Burgas Managing Board Chairman Ilshat Sharafutdinov:

If tankers stop coming, we will have immediate problem. We have good communication with the state institutions. Currently, there is no such threat [for stopping oil deliveries] but if extreme measures are taken, such as embargoing Russian crude oil, we can't provide any guarantees.

As for whether LUKOil can refine non-Russian oil, crude oil brands come in a wide range of quality grades. We had refined and can refine some, we had not refined others, and there are some which cannot be delivered, such as the Venezuelan oil, for example.

Sharafutdinov spoke to journalists during commemoration ceremony of Victory Day at the Monument to the Soviet Army in Burgas.

Vasko Nachev:

There is no problem for the refinery to work with other oil blends. Many other oils, such as Iranian, Libyan, and some of the Saudi Arabian oils, have the properties of Russian oil. The transport costs, logistics, and organization will certainly make it more difficult for LUKOil, but saying that the refinery should shut down if Russian oil deliveries stop, is a manipulation.

It is unlikely that Russian oil supplies to Europe will be suspended, as Hungary has already announced that it will veto EU’s sixth package of sanctions against Russia.

Oil prices have already increased a lot due to the rumours of possible suspension of Russian oil supplies to Europe. That is due to the speculative behaviour of the large traders.

From now on, it will be very difficult to lower the prices. 

Hristo Kazandjiev:

LUKOil Neftochim Burgas can refine Brent crude and similar. Brent and Ural are similar and there should not be any problems in refining other blends. In the recent past, LUKOil Neftochim Burgas also used oil from Libya and the whole Mediterranean region.

It is high time for the state to seriously intervene and regulate properly Neftochim Burgas.

There will be no price increase if Russian oil supplies to Bulgaria are discontinued. Currently, LUKOil Neftochim Burgas sells oil derivatives at Brent-based prices on the Mediterranean market. There should not be change in fuel prices as LUKOil sets them in line with the Mediterranean Stock Exchange prices. If that was not the case, prices would have been lower since LUKOil refines Russian gas only, which is currently 20-25% cheaper than Brent - but they are not.

Balkan and Black Sea Petroleum Association Chairman Valentin Kunev:

Switching from Russian oil to another variety will cause great turmoil and will be painful both for the refinery and for the market in Bulgaria. In an official statement, former LUKOil president Vagit Alekperov said that following a renovation at the Burgas refinery, it would be able to refine other blends of oil. An EU embargo on Russian oil will result in price hikes as there will be a supply crisis. Prices, however, are unlikely to go up if Bulgaria is granted an exemption from the embargo, as Russia will be aiming to sell its oil when there are fewer buyers and the price will probably decrease.