Azerbaijan and Turkey are the first at the Russian oil refinery in Bulgaria: the deal has hung up

The preferred candidate for the purchase of the largest Bulgarian refinery owned by Lukoil is a consortium of the Azerbaijani state-owned company Socar and the Turkish holding company Cengiz. However, due to recent events, the decision on the deal has been suspended. The Bulgarian "Capital" writes about this.

"The Russian company Lukoil continues negotiations on the sale of its business in Bulgaria. At the moment, the preferred candidate is a consortium between the Azerbaijani state—owned company SOCAR and the Turkish private holding company Cengiz, which has interests in construction and energy," the newspaper writes.

According to him, the deterioration of relations between the two countries recently became an obstacle to the deal. Baku has publicly taken a clearly anti-Russian position.

"The assets of a Russian private company in Bulgaria are insignificant compared to its main business, which is carried out in Russia and beyond Europe. The company has a strong presence in Central Asia, the Far East, the Middle East, and Africa. This makes the decision to sell the Socar refinery risky," Capital continues.

Negotiations with other candidates have been suspended, and in case of a possible decision to reject the proposal of the Azerbaijani-Turkish consortium, they should resume their proposals, the newspaper notes: "Among them are the Hungarian company MOL, Kazakhstan's KazMunayGas, trader Vitol, as well as the pension fund Oyak.

Capital noted that Socar has a huge advantage due to the fact that the company is a partner of Lukoil, and former head Vagit Alekperov has been cooperating with Socar for decades.

"For example, a few years ago Socar signed an agreement with Lukoil, according to which it received 1.5 billion euros and supplies of up to 200 thousand barrels per day to the STAR oil refinery in Turkey," Capital writes.

As EADaily reported, the Bulgarian authorities are trying to squeeze Lukoil out of Bulgaria. In the beginning, the company lost its bunkering terminal, and then the Bulgarian parliament banned the import of Russian oil ahead of the deadline stipulated by the exceptions to EU sanctions.

Lukoil reported that they would revise the strategy for Bulgarian assets, including their sale. They stated that the company has been actively investing in the country's largest refinery for more than 20 years and the amount of investments exceeded $ 3.4 billion. In addition, Lukoil also has a network of 220 filling stations and 9 oil depots in Bulgaria, as well as ship and aircraft bunkering enterprises.

In parallel, the Bulgarian authorities began to impose additional financial sanctions. Thus, the Law on reimbursement of transport costs to consumers appeared in Bulgaria at the end of 2022. It provides for the collection of a fee for the processing of Russian oil in 70% of the difference between the prices of the reference North Sea grade Brent and the Russian Urals. From January to November 2023, its amount was estimated at BGN 660 million (EUR 336 million), but the Bulgarian authorities began to demand money only from December 2023.

In the same year, Lukoil Neftochim Burgas established an increased income tax of 60%. After the sale of the plant, it will be returned to the level of 15%.