site.btaEnergy Minister Stankov: Lukoil Neftochim State Representative Not Given Clear Response on Refinery Sale

Energy Minister Zhecho Stankov said during a hearing in the National Assembly on Thursday that the State representative on the Supervisory Board of Lukoil Neftohim Burgas, Tsvetan Tsirkov, has not received a clear response on whether the company's sale process has begun.

The hearing focused on safeguarding national interests amid the refinery's ownership change and included discussions on related infrastructure, such as oil pipelines, product pipelines, and storage facilities.

Stankov noted that Tsirkov participated in a Lukoil Neftohim meeting where both the report on expected financial performance and the 2024 business plan were reviewed.

Stankov said the golden share provides certain rights to protect the State, but the new screening model for company management grants even greater powers to the country. "No one working at the refinery should worry about their job," Stankov said.

Stankov proposed that the State representative on the Supervisory Board of Lukoil Neftohim should submit reports every six months not only to the energy minister but also to the parliamentary committees on energy and economy.

During the same hearing in Parliament, Economy and Industry Minister Petar Dilov responded to a question by MP Delyan Dobrev regarding the missed revenues from the windfall profit law affecting Lukoil Neftohim. Dobrev noted that the law stipulates that 70% of this windfall profit should be paid into the Security of the Electricity System Fund. 

Dilov said in his response that for the period between February and September in 2023, Bulgaria missed a total of BGN 637,826,114 before the law on compensating consumers' transport costs came into force, citing data from the Customs Agency.

When asked why the law was not submitted for notification to the European Commission, Dilov said he did not know the reason for it.

Earlier on Thursday, Prime Minister Rosen Zhelyazkov said that under the screening mechanism introduced, prior authorisation is required for any foreign direct investment that meets the conditions specified in the law.

Bulgaria regards the Lukoil Neftohim Burgas refinery as a strategic installation. The State holds a Class A (or "golden share") in the oil refinery. This blocking minority interest entitles the Bulgarian Government to convene a shareholders' general meeting on all key issues concerning the company. One member of the company's Supervisory Board is named by the Minister of Economy. This representative was replaced in mid-November, as Tsvetan Tsirkov took over from Boyko Nitsov. A sale of or change in the majority holding in the Russian-controlled company has to be cleared with the Commission on Protection of Competition and the State Agency for National Security. Under Bulgarian legislation, the State can take control of the refinery if national security is jeopardized.

This year, Hungary has imported 7.5 billion cu m of Russian gas over the TurkStream pipeline and additional quantities via Romania.

Analysts warn that Russian financing may be attracted as the bidder's (the Hungarian Oil and Gas Plc – MOL) financial capabilities are limited, www.oilprice.com said.