Romania says it ‘must take control’ of Lukoil refinery after Bulgaria fast-tracks seizure law

Romania said it ‘must take control’ of Lukoil’s Petrotel Ploiești refinery to guarantee full implementation of US sanctions, following Bulgaria’s fast-track passage of legislation to seize Lukoil’s assets, as turmoil from Washington’s recent sanctions on Russian energy giants Lukoil and Rosneft continues to rattle fuel markets worldwide.

‘Romania must take control of the company to guarantee the full implementation of international measures, to protect the jobs of the 5,000 employees and to ensure the stability and security of the national energy system,’ Energy Minister Bogdan Ivan said in a Facebook post.

He said his country will not seek an extension to the 21 November deadline by which ccompanies worldwide must wind down transactions with the Russian oil producers or face secondary US sanctions themselves.

Ivan said the government is working ‘on the creation of legislation that will ensure, on the one hand, full compliance with the sanctions regime established by the United States, and on the other hand, the continuity of the refining activities of Petrotel Ploieşti’.

His comments follow Bulgaria’s deployment of military police and anti-drone systems at Lukoil facilities nationwide after parliament last week approved amendments allowing the state to appoint a special administrator for Lukoil, essentially granting it powers to seize the company. 

Pavela Mitova, chair of Bulgaria’s energy commission, said the legislative proposal had been agreed with US and European partners. According to the government, the law is based on a ‘German model approved by OFAC’.

Russia’s Ambassador to Bulgaria, Eleonora Mitrofanova, told TASS that Bulgaria’s actions were ‘hasty and legally questionable’. ‘We still need to see how this law will function, but as of today, it looks like a law on expropriation of property,’ she said. ‘The Bulgarians are taking a very risky step. They are creating a dangerous precedent.’

In Finland, Lukoil-owned fuel chain Teboil – one of the largest nationwide – has begun shutting down operations as its fuel supplies run dry following the US sanctions, according to local media reports. 

‘If Teboil collapses completely, the price will be high, especially in Eastern and Northern Finland’ where the stations are especially concentrated, the Helsingin Sanomat daily wrote.

Other European countries affected by the US sanctions include The Netherlands, which is preparing for a quick sale of Lukoil’s stake in the Zeeland refinery, while Germany has received temporary exemptions for Rosneft’s subsidiaries.

On 22 October, the US Treasury Department added Lukoil and Rosneft to its Specially Designated Nationals list.  Following the announcement, Lukoil said it would sell its international assets, including refineries in Bulgaria, Slovakia and Romania.

Between them, Rosneft and Lukoil are responsible for 55% of Russia’s oil output and export 3.1 million barrels of oil per day.