Kazakh company offers $1 billion to buy Russian refinery in Bulgaria

Kazakhstan's state oil and gas company KazMunayGas has offered $1 billion to acquire the only oil refinery in Bulgaria, Lukoil Neftekhim Burgas, which is currently owned by Russia's Lukoil.

This is reported by Euractiv, UNN.

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This step demonstrates the strengthening of Kazakh oil's position in Europe amid the refusal of Russian energy resources after Russia's full-scale invasion of Ukraine.

Increased influence of KazMunayGas in Europe

Burgas currently receives about 40% of its supplies from KazMunayGas, and the potential deal will strengthen the Kazakh company's position in the European market.

KazMunayGas already owns the Romanian oil refining company Rompetrol, which, in turn, operates a network of gas stations in Bulgaria. The deal will allow the Kazakh company to more than double its oil refining capacity in Europe.

After the outbreak of the war in Ukraine, European refineries have significantly increased their imports of Kazakh oil. According to Bloomberg, they now buy about 80% of the oil transported through the Caspian Pipeline Consortium, compared to 50% before the war.

Potential buyers and the role of Swiss companies

The Swiss company Litasco, a subsidiary of Lukoil, has already received offers from several potential buyers, including KazMunayGas. The Kazakh company is also discussing financing for a possible acquisition with the Swiss Vitol Group, the world's largest independent oil and gas trader, which is active in Kazakhstan.

One of Vitol's subsidiaries has a license to trade electricity and gas in Bulgaria, which may facilitate the deal. Other bidders and the Bulgarian government's positionIn December, the Bulgarian government confirmed that Hungarian oil and gas company MOL was among the candidates for Burgas.

In late December, Hungarian Prime Minister Viktor Orban visited Bulgaria, and this issue was allegedly discussed during official meetings. In early 2024, Bulgaria will ban Lukoil from refining Russian oil, forcing the company to increase the share of Kazakh oil in its supplies to 40%, with the rest coming from the Middle East.

Terms of the deal and prospects According to Bloomberg sources, the sale of the plant in Bulgaria may take about a month. One of the key conditions of the deal is that the funds must be transferred to Litasco, which is not subject to Western sanctions. At the same time, the company must guarantee that the money will not be transferred to Russia.

Despite the fact that the announced $1 billion deal seems insignificant, KazMunayGas is seeking the support of the Bulgarian government, arguing that the plant is optimized for processing oil similar in characteristics to Kazakh oil.

Bulgaria's Energy Minister Vladimir Malinov said in December that the government is “closely monitoring the process, but cannot directly influence the change of ownership, as the plant currently has one private majority owner.

Recall

A bill to ban the transit of Russian oil has appeared in the Rada.

Oil prices rose on January 8 as supplies from Russia and OPEC declined.