Bulgaria Moves to Nationalize Lukoil Refinery Amid U.S. Sanctions

On Friday, Bulgaria’s parliament enacted legal modifications to place a significant Lukoil refinery located in the eastern part of the nation under governmental control in response to U.S. sanctions imposed against the Russian oil corporation.

Last month, the United States imposed sanctions on Russia’s two largest oil firms, Rosneft and Lukoil, due to the ongoing conflict in Ukraine.

Lukoil has been the owner of the Neftochim facility, which is the largest oil refinery in the Balkans, situated in Burgas on the Black Sea, since 1999. Lukoil-Neftochim also ranks as Bulgaria’s largest enterprise.

The U.S. sanctions, set to take effect on November 21, are expected to effectively halt the refinery’s functioning. According to the proposed legislation put forward by Bulgaria’s ruling coalition, this is a result of all business partners refusing to process payments to Lukoil-affiliated companies.

The legislative proposal includes provisions for appointing a special administrator to exercise the voting rights of shareholders. This administrator may sell shares to a new owner, subject to government authorization.

The law was swiftly advanced through parliament, gaining the approval of a majority of legislators.

During the discussions, opposition members accused the bill’s proponents of hurrying the legislative process. They also criticized the special administrator’s authority to sell the refinery’s shares, warning it might open Bulgaria to potential legal challenges.

Ruslan Stefanov, an expert in energy governance and security at the Center for the Study of Democracy, stated that while the government’s strategy signifies a positive move, it carries inherent risks.

«Keeping the option for nationalization on the table—although the intent to exert more control is understandable—is quite hazardous and could potentially diminish the impact of the sanctions, giving Lukoil grounds to sue the Bulgarian government for significantly higher compensation,» Stefanov explained to AFP.

Recently, Bulgarian lawmakers established temporary export restrictions on petroleum products, including shipments to other EU countries, to ensure adequate supply in light of U.S. sanctions impacting Russian energy.

The ban affects the export of petroleum products such as diesel and aviation fuel but allows exceptions for refueling and reloading local and foreign vessels and aircraft, as well as for supplies to NATO armed forces or any EU member states’ military forces in connection to the bloc’s collective security and defense policies.

The Lukoil-Neftochim refinery plays a crucial role in Bulgaria’s economy, with a turnover of approximately 4.7 billion euros ($5.4 billion) recorded in 2024. Its distribution segment holds a near-monopoly in the Bulgarian market, operating a network of oil depots and gas stations, as well as supplying vessels and aircraft.