site.btaUPDATED Kremlin Generates EUR 1 Bln Profit of Fuel Exports through Bulgaria

The Neftochim oil refinery in the Bulgarian Black Sea city of Burgas, majority-owned by Russian company Lukoil, has circumvented an EU ban on member states to trade in products made from Russian oil, and by taking advantage of a derogation concerning the import of Russian crude oil and oil products, the refinery has earned big profits. The Kremlin has generated a profit of some EUR 1 billion of Bulgaria's fuel exports made from Russian oil, according to a report by the Center for the Study of Democracy (CSD). The information was presented to journalists by Martin Vladimirov, Energy and Climate Programme Director at the CSD, on Thursday. In Vladimirov’s words, the report, prepared together with two international organizations, shows that some EUR 1 billion in finished fuels have been exported around the world.

"European ports have been used to transfer the fuels to other ships so that they reach their final destinations. There are also two specific cases in which Bulgarian fuels produced with Russian oil have been imported to Rotterdam in the Netherlands. There is also a transfer of Bulgarian fuel produced with Russian oil to Florida," Vladimirov explained.

He stressed that the report was submitted to Politico, as the news outlet has also been working on the subject.

According to Vladimirov, Lukoil takes advantage of a loophole in the derogation texts, which say the company can export fuels produced from Russian oil when the environmental security of a region is threatened. No such risks have been observed in Bulgaria, he emphasized.

Vladimirov recalled that six months after the derogation from the EU-wide ban on the imports of Russian crude oil entered into force in Bulgaria, the Bulgarian state was obliged to provide a detailed report to the European Commission on the implementation of the sanctions and the derogation. "To our knowledge, the European Commission has not received such an analysis," he said.

Vladimirov stressed that the CSD report is independent.

Commenting on the topic, Bulgarian Prime Minister Nikolay Denkov said that this information does not come as a surprise, as much of the report was known before.

Denkov recalled that the derogation period is shortened until October 2024 because Bulgaria should gradually switch to non-Russian oil. "We have to make sure that it does not turn out that the port [in Burgas] lacks oil and the refinery cannot operate because of it. This is a different issue from how Lukoil, by transferring [fuels] from one tanker to another, or by forging documents in other countries, circumvents the relevant regulations. That is not within the remit of the government", Denkov explained.

The Lukoil Neftohim refinery denied circumventing the European Union's embargo on Russian oil products, as presented in the report. Speaking to the Bulgarian National Radio, Aleksandar Velichkov, Deputy Chairman of the Refinery's Supervisory Board, argued that the implication that Lukoil is somehow violating and/or circumventing the embargo is false. "The truth is very simple. The refinery has certain quotas of products it is allowed to export. One of the tankers carried such a product - low octane gasoline, which can be exported. As for the other product, the 2014 regulation itself refers to specific types of products with customs codes. We have only exported authorised products," Velichkov told BNR.