site.btaUPDATED Hungary’s MOL Company Bidding for Lukoil Neftohim, Bulgaria's Energy Minister Comments

MOL (the Hungarian Oil and Gas Plc) is bidding for Lukoil Neftohim in Burgas (on the Black Sea), Hungarian Prime Minister Viktor Orban said during his annual news conference on Saturday.

"Lukoil, a private Russian firm, wants to sell one of its refineries. It invited an open tender and one of the seven bidding companies is MOL, the only company from the European Union. A decision will be made by the Bulgarians," Orban said, quoted on his official website, https://miniszterelnok.hu

The Hungarian head of government confirmed that he had received guarantees that Bulgaria would not be an obstacle to Hungary's gas supplies. He visited Sofia on December 20 and conferred with President Rumen Radev and GERB leader Boyko Borissov.

Asked to comment on media stories that MOL is bidding for Lukoil Neftohim, caretaker Energy Minister Vladimir Malinov told journalists Monday that the Bulgarian State is closely monitoring, but cannot directly interfere in the process of changing the ownership of the Lukoil Neftohim refinery, which is currently a majority private shareholder.

"As a government and as Minister of Energy, we fully respect private ownership, from this point of view the Bulgarian State cannot have a decisive say in the change of ownership of the refinery", Malinov said, adding that from the point of view of the importance of the refinery not only for national security but also for Bulgarian energy security, the government is following these developments closely. "On December 18, there was a meeting of the Supervisory Board of the refinery, where through the representative of the State we have asked to be informed in due time about the process regarding the change of ownership, and we expect to be informed in due time at each stage", Malinov said.

Asked if the issue was discussed when he met with Hungarian Foreign and Trade Minister Peter Szijjarto in Sofia earlier in December, Malinov said that at the meeting the Hungarian side had said that there was such interest and a Hungarian company was one of the participants in the process to submit bids to buy the majority ownership stake in the refinery.

Asked whether there should be a parliamentary sanction for such a decision, Malinov said that once the process of ownership change is completed, the Government is ready to prepare a report to present to the National Assembly, and from then on MPs will decide what act they should adopt and what action should be taken.

The refinery

A five-year contract under which Russia transits gas via Ukraine to Slovakia, Czechia and Austria will expire on January 1, 2025. Kyiv has repeatedly confirmed that it will not extend the contract because of the Russian aggression.

Bulgaria regards the 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 MOL's financial capabilities are limited, www.oilprice.com said.