site.btaWhat Are Romania's Plans for Lukoil’s Refinery and Network of Gas Stations

While Bulgaria and Serbia received exemptions or postponements of the international sanctions imposed by the United States and their partners against Russian oil and gas giants, Romania announced that it will not seek a delay for the sanctions against the oil company Lukoil and is working on legislation to transpose the sanctions into national law, while also aiming to limit the negative consequences for the trading partners of the two sanctioned companies, Lukoil and Rosneft. Against this backdrop, fuel prices in Romania are rising, while local politicians and experts assure the public that the situation will stabilize. What are Romania’s plans for Lukoil’s refinery in the country - Petrotel in the city of Ploiesti - and for the 320 gas stations of the Russian oil group? Are any problems likely for the natural gas extraction project in the Trident perimeter in the Black Sea? Here are the latest developments on these issues:

At the beginning of last week, Energy Minister Bogdan Ivan announced in a Facebook post that Romania will not request an extension of the November 21 deadline set by the US authorities for the sanctions against Lukoil. November 14, he revealed further details about the measures being taken by the government regarding the situation.

"At the government level, we are working with several ministries to clarify the transposition of these international sanctions into national legislation, on the one hand, and on the other hand, we are working to limit the negative impact on suppliers, distributors, and all economic entities that currently have official business relations with the two companies subject to international sanctions (Lukoil and Rosneft)," said the minister, quoted by the national news agency Agerpres, on the sidelines of an energy conference in Bucharest.

He added that the draft will be adopted at the next government meeting, while technical discussions are ongoing with the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) to clarify details that will ensure no negative effects on employees, suppliers, or business partners of the two sanctioned companies.

The minister assured the press that once the legislation is finalized, it will be explained "in detail."

When asked whether Romania would seek an exemption from the sanctions, as Bulgaria did, the minister replied: "Bulgaria depends on the Burgas refinery for over 90% of its fuel. Ours is a different case. At the moment, Romania does not depend on refineries subject to sanctions for its fuel supplies. We have no intention to do so. Today, after discussing the matter with the US Office of Foreign Assets Control (OFAC), we will see exactly how we will implement these sanctions."

According to him, at least three companies have officially expressed interest so far in Lukoil’s network of gas stations in Romania and in the Petrotel refinery in Ploiesti, whose annual refining capacity is approximately 2.5 million t.

“There are companies that have shown interest only in the gas station network, and others only in the Petrotel refinery. It is now clear that this is a commercial offer between two private entities, which, I hope, will be finalized,” the Minister said, specifying that the companies are from Romania, the US, Greece, and Hungary.

He also stated that Lukoil’s debts to the Romanian state amount to hundreds of millions of lei, Agerpres reported.

NEW DEADLINE FOR THE SALE OF LUKOIL’S INTERNATIONAL ASSETS

On November 14, the US Department of the Treasury issued a series of licenses, one of which allows companies to negotiate with Lukoil until December 13 for the acquisition of its international assets.

Washington announced that it will only allow a deal that completely severs ties with Lukoil after the sale of the assets, and that the proceeds from the sale will be deposited into a trust account to which Lukoil will have no access while under sanctions. Agerpres notes that the US Treasury has stated it will allow deals involving Lukoil’s structures in Bulgaria to be completed by April 29, 2026.

SANCTIONS AND FUEL PRICES

Despite the actions taken by the government in Bucharest regarding Lukoil’s assets, fuel prices in Romania have risen rapidly over the past couple of weeks. The price of diesel crossed the psychological threshold of RON 8/l (BGN 3.08/l). Fuel prices have increased several times since the beginning of the month, with diesel rising by 3.1% and gasoline by 1.3%, Digi24 TV reported. The average price of gasoline in Romania as of November 15 was RON 7.53/l (RON 2.69 BGN), and diesel was RON 7.98 (BGN 3).

Mihai Nicut, a journalist specializing in energy issues, explained for Digi24 that among the reasons for this price increase are the approaching embargo on Russian supplies and pressure on refineries in the region.

"In terms of prices, we are observing an increase. It is more pronounced for diesel, which, unfortunately, is not produced in sufficient quantities in Romania for the domestic market. Additionally, it is this part of the year when diesel consumption traditionally increases. We had an increase of RON 0.44/l over a period of some two weeks. But not only in Romania. This happened throughout the region," Nicut told Digi24.

According to him, the rise in fuel prices is seen across Europe because a full embargo on supplies from Russia is approaching, and people are rushing to buy and stock up, which puts pressure on prices.

Mihai Nicut also linked the price increase to the uncertain future of refineries in the region.

"In our region, there is pressure not only related to the uncertain future of our refinery (Romania’s Petrotel-Lukoil) and the refinery in Bulgaria, which is three times larger than ours and the only one in Bulgaria, but we also have other problems as well. A refinery in Serbia is closed, also due to sanctions, and diesel is imported from within region. Consumption in Ukraine is also increasing,” Nicut told Digi24.

Energy Minister Bogdan Ivan said November 14 that the increase in fuel prices in Romania is unjustified and that he has asked the competition watchdog to examine the issue to avoid potential price gouging in the aftermath of the sanctions imposed on Lukoil, Agerpres reported.

"At the moment, there is no objective factor to justify the increase in fuel prices, considering that Romania already has sufficient fuel reserves, that the Petrotel refinery still has unused production capacity for fuels, and that Romania is currently exporting diesel and gasoline to neighboring countries through various companies," the minister said. He added that any price gouging will be sanctioned.

Romanian Prime Minister Ilie Bolojan also stated earlier this week that the situation around Lukoil should not lead to an increase in fuel prices in Romania.

"There should not be such situations because the refinery owned by Lukoil in Romania is currently closed (for maintenance), so it is not operating, and Lukoil’s share is significant but not enough to cause serious problems," Bolojan said in an interview with Euronews Romania.

LUKOIL AND NAT GAS PROSPECTING IN THE BLACK SEA 

However, the prime minister drew attention to another important issue related to Lukoil’s role in the country.

"We have important companies working with Lukoil, such as Romgaz, which is a partner of Lukoil in a project in the Black Sea area,” he said in an interview on Thursday evening.

He warned that if a commercial solution is not found, it will be very difficult for Lukoil to operate in Romania after the sanctions come into effect.

Former Energy Minister Sebastian Burduja also believes that the sanctions against Lukoil create difficulties for the Romanian state company Romgaz, which - together with the Russian company - holds a concession for gas prospecting in the Trident perimeter in the Black Sea, with potential reserves of about 30 billion cubic meters of gas.

"Romgaz is in a very delicate situation in Trident because it has to make certain payments to Lukoil, which is carrying out the prospecting operations. If they make these payments, they wonder whether they will be subject to US sanctions,” Burduja told Radio Free Europe.

The former energy minister noted that the licence for operating the Trident perimeter expires in October next year. According to him, in talks with the US, it may be requested that the operation continue until then to avoid exposing the Romanian state to the risk of legal disputes.

Agerpres also reported that the US Department of the Treasury has issued a licence allowing transactions with the company managing the Caspian Pipeline Consortium and the Tengizchevroil project, even if sanctioned oil companies are involved.

The Caspian Pipeline Consortium, in which Lukoil participates, produces over 1.6 million barrels of crude oil per day (some 1.5% of the world’s oil production) from fields in Kazakhstan, developed jointly with major companies from the US and EU such as Chevron, Exxon Mobil, Eni, Shell, and TotalEnergies.

EUROPE MUST ACT UNIFORMLY, SAYS ROMANIAN EXPERT

Regarding the sale of Lukoil’s international assets, Romanian expert Otilia Nutu from the Expert Forum think tank believes that Europe should act uniformly, rather than each country individually seeking solutions and negotiating with the US.

"It is important that we all turn to the EU with a consistent and feasible plan that cannot be overturned by any court," Otilia Nutu told the Romanian section of Radio Free Europe.

If a plan is presented that guarantees that the money received by Rosneft and Lukoil does NOT go to Russia, it cannot but be accepted, the expert believes.

The US Department of the Treasury announced that it has issued a license that opens the way for negotiations for the possible sale of Lukoil’s foreign assets.

Earlier this week, Reuters sources reported that the American private equity fund Carlyle is exploring opportunities to acquire Lukoil’s international assets. Other companies that could make offers to acquire parts of Lukoil’s international assets, include KazMunayGas and Shell, Agerpres reports, citing Reuters.