No steps have been taken in the last year regarding the derogation for import of Russian oil and oil products for processing in Lukoil Neftohim Burgas. There is no timetable and no concrete measures taken by the refinery. This is what Minister Bogdan Bogdanov told the media before the meeting of the economic committee. In his words, the first steps have been taken by the current government. The report prepared by the Security Council to the Council of Ministers takes into account specific risks if the derogation is abolished within 30 days. Minister Bogdanov stressed that this deadline poses serious risks – on the one hand disruption of the rhythmic supply of crude oil and on the other hand – logistical risks related to the negotiation of new quantities from countries outside the Bosphorus, which will take time for transportation.
At the meeting, MPs from the parliamentary committee on economic policy adopted on second reading amendments to the law on the implementation of restrictive measures in view of Russia’s actions destabilizing the situation in Ukraine, according to which by 1 October 2024 the refinery in Burgas must switch smoothly to the processing of entirely non-Russian oil. According to the texts voted, by the end of this year the refinery can use no more than 80% Russian oil in production, by 31 March 2024 – no more than 75%, by the end of June – up to 50%, and by 30 September – up to 25%.
“The main problem at the moment is that for the derogation to be abolished we must first have agreed quantities of non-Russian crude oil to be processed at the refinery,” Minister Bogdanov added. According to him, these quantities should be negotiated in such a way as to ensure the rhythmic supply and quality of the raw material. In the minister’s words, this would mean signing long-term contracts, which come at a higher price. “This in turn would lead to a price increase for end users, which we consider a serious risk,” Bogdanov stressed.
The economy minister assured that if the derogation is phased out with well-gauged measures and very clear criteria, no shocks are expected. Minister Bogdanov pointed out that the period of 12 months is an appropriate period for the abolition of the derogation for import of Russian oil and oil products for processing in Lukoil Neftohim Burgas. By adopting a deadline of 1 October 2024, possible price increases, speculation and even fuel shortages – risks, provoked by the 30-day deadline, will be avoided.
“We are looking for maximum diversification and reduction of risks in terms of supply of oil and oil products for processing,” Bogdanov was adamant. The Minister said that future deliveries should be agreed as soon as possible so as to secure the refinery’s production cycle in optimal volumes without significantly reducing production.