EU members Bulgaria and Romania are working to mitigate the impact of US sanctions on Russian oil giant Lukoil, which owns refineries in both countries. The sanctions, imposed last month, accuse Russia of lacking commitment to the Ukraine peace process. Lukoil controls Bulgaria’s largest refinery, Neftochim Burgas, and Romania’s Petrotel, prompting concerns about potential disruptions to fuel supplies.
In Bulgaria, officials fear that the sanctions could shut down the Burgas refinery, which supplies up to 80% of the country’s fuel, leading to potential fuel shortages and protests. To address this, Sofia is seeking an exemption and has asked Washington to delay the measures. Additionally, Bulgarian lawmakers have passed a bill allowing the government to take control of Burgas if necessary, as well as approve its sale or nationalize it.
Romania’s fuel supply faces less risk from the sanctions, as Petrotel covers about 20% of demand. However, Bucharest is also considering seeking a sanctions extension. Analysts believe that a potential Petrotel shutdown would cause only mild price increases within the country but could disrupt exports to neighboring Moldova, which relies heavily on Romanian supplies. Nationalization of Petrotel is seen as a “last option” by Bucharest.
Following the US sanctions announcement, Lukoil accepted an offer from energy trader Gunvor Group to buy its subsidiary holding all foreign assets. However, Gunvor withdrew its bid after being accused of Kremlin ties, which it denies. Moscow has long condemned Western sanctions as politically motivated and illegal, warning they will backfire and destabilize global markets.
The US sanctions on Lukoil are set to take effect on November 21, and the situation is being closely monitored by the affected countries. The potential disruption to fuel supplies in Bulgaria and Romania highlights the complexities of imposing sanctions on Russian entities and the need for careful consideration of the consequences. As the situation develops, it remains to be seen how the EU members will navigate the challenges posed by the sanctions and ensure a stable fuel supply for their citizens.
