Iran Energy News Oil, Gas, Petrochemical and Energy Field Specialized Channel
Related Articles
Kazakhstan’s state-owned oil and gas company KazMunayGas has reportedly offered $1 billion to buy Lukoil Neftochim Burgas, Bulgaria’s only refinery currently owned by Russia’s Lukoil.
The Burgas refinery already receives about 40% of its supplies from KazMunayGas, and the acquisition would strengthen the Kazakh company’s position in the European market.
KazMunayGas already owns the Romanian refiner Rompetrol, which in turn owns a number of filling stations in Bulgaria under the Rompetrol name. The deal would more than double the Kazakh company’s European refining capacity.
Russia invaded Ukraine, and European refiners have increased their imports of Kazakh crude. They now buy about 80% of the oil delivered through the Caspian Pipeline Consortium, up from 50% before the war, according to ship-tracking data compiled by Bloomberg.
Litasco, the Switzerland-based arm of Russia’s Lukoil, has already accepted binding offers from several potential buyers for the refinery, including KazMunayGas, according to Bloomberg.
The Kazakh state-owned company is discussing financing for the potential acquisition with the Switzerland-based Vitol Group, the world’s largest independent oil and gas trader, which is a major player in Kazakhstan. A Vitol subsidiary has a licence to trade electricity and gas in Bulgaria.
In December, the Bulgarian government confirmed that Hungarian oil and gas company MOL was among the candidates for the Burgas refinery. At the end of December, Hungarian Prime Minister Viktor Orbán visited Bulgaria, and the acquisition was reportedly part of the official discussions.
At the end of 2023, Bulgaria will ban Lukoil from refining Russian oil, forcing the company to increase its supply of Kazakh oil to about 40%, with the rest being a mix of Middle Eastern oil.
KazMunaiGas reportedly expects the process of selling the Bulgarian unit to take about a month, according to one of the sources cited by Bloomberg.
A condition of the deal is that the money is transferred to Litasco, which owns Lukoil and is not under Western sanctions. The company must provide a guarantee that the money will not be transferred to Russia.
The reported sale price of around $1 billion seems small.
KazMunaiGas is reportedly seeking support for its bid from the Bulgarian government, arguing that the refinery is designed to process Russian oil of a quality similar to Kazakh crude.
The Bulgarian government “is closely following the process but cannot be directly involved in the change of ownership, as there is currently one majority private owner,” Energy Minister Vladimir Malinov said in December.
