In a recent development, Bulgarian political parties GERB and DPS have escalated their stance against Lukoil, a Russian-owned energy giant operating in Bulgaria. The parties are considering a move to cut off Russian oil supplies to Lukoil's Burgas refinery while transferring operational control of its Bulgarian business to the government. This move is rooted in concerns over national security and possible violations of EU sanctions against Russia.
Lukoil owns the largest refinery in the Balkans, situated in the Bulgarian city of Burgas. Additionally, the company has a monopoly over fuel storage warehouses in Bulgaria. Under a Bulgarian law enacted after the Russian invasion of Ukraine, the state has the authority to appoint a "special commercial administrator" to assume control of the Lukoil Neftochim Bulgaria refinery in the face of national security threats. This law allows the state to take over Lukoil's operations for an initial period of six months, with the possibility of an extension if deemed necessary.
GERB MP Delyan Dobrev has voiced concerns about possible violations of EU sanctions against Russia. He highlighted that fuels produced by Lukoil from Russian oil may be exported to EU countries, raising issues regarding adherence to these sanctions. The intention to pressure Lukoil further garnered support from Delyan Peevski, co-leader of the DPS parliamentary group, who emphasized the importance of aligning with Euro-Atlantic principles and citizens rather than Lukoil and Russia. Peevski, despite being sanctioned by the US for alleged corruption, wields increasing political influence.
DPS leader Peevski has indicated that they will request the customs and tax agency to provide information on Lukoil's activities, particularly in terms of sanctions compliance and tax payments. The government, led by Prime Minister Nikolay Denkov, is cautious about provoking a potential crisis in the fuel market. Counterintelligence reports have raised alarms, suggesting that ending Russian oil imports could lead to a significant increase in fuel prices. Finance Minister Asen Vassilev acknowledged that the parliament had previously discussed halting Russian crude oil supplies, and any new proposals will be subject to government review.
For Forex and crypto traders, these developments could have far-reaching effects on currency values, particularly for the Bulgarian lev. The uncertainty surrounding the Lukoil situation and the potential for increased fuel prices may impact Bulgaria's economic stability and consequently influence the exchange rate of the lev. Traders should closely monitor the ongoing political and economic developments in Bulgaria and the region to make informed decisions in the Forex market. As tensions between the Bulgarian government and Lukoil escalate, the Forex market may experience fluctuations that require careful analysis and strategy adjustments.