site.btaBulgaria Suspends Fuel Exports to EU, Incumbents Call It Preventive Measure, Opposition - Cause for Panic

At its sitting here on Friday, the National Assembly adopted, 135-4 with 42 abstentions, a bill suspending the export and intra-Community supply of petroleum products, mainly diesel and aviation fuel, to European Union (EU) Member States. The ban will not apply to the refuelling of domestic or foreign vessels and aircraft, nor to intra-Community supplies to the armed forces of EU and NATO member countries. 

The ban will come into effect on the day of its promulgation in the State Gazette. 

The bill was submitted by Delian Dobrev (GERB-UDF), Stanislav Anastassov (MRF-New Beginning), Pavela Mitova (There Is Such a People), and Atanas Atanasov (BSP-United Left), and was considered earlier on Friday during an extraordinary meeting of the Budget and Finance Committee.

According to the Committee's resolution, the measure is motivated by the need to ensure the country's energy security and the stability of the domestic fuel market in view of the sanctions recently imposed by the US against the Russian company Lukoil.

In Bulgaria, Lukoil owns Lukoil Neftochim Burgas, the largest oil refinery in the Balkans, through its Swiss-registered subsidiary Litasco. Lukoil also owns Lukoil Bulgaria, a leading Bulgarian motor fuel retail company, via Litasco. According to the Commission for Protection of Competition, Lukoil Bulgaria has a relatively large market share in this country and is a market leader in the wholesale of automotive fuel, with a share fluctuating between 40-50% and 50-60%. It is Lukoil's 89.97% shareholding via Litasco that places these key Bulgarian energy assets directly within the scope of the recent US sanctions. The sanctions are expected to affect its ability to operate normally within the global financial system, potentially limiting its access to international banking services and supply chains that rely on US dollars or entities.

Budget Committee Chair Delian Dobrev specified that the ban on the export of petroleum products is a preventive measure aimed at avoiding market abuse. "The reason is to prevent speculation with prices, as there are interested parties attempting to engage in such practices," he added.

According to him, the temporary restrictions do not affect petrol, since the quantities produced in the country exceed domestic consumption. The restriction applies to petroleum products for which there is a risk of artificially inflated prices. Bulgaria consumes mainly diesel - over 80% of the fuels sold domestically are diesel, while petrol accounts for less than 20%, Dobrev said.

Talking to reporters, Dobrev said that the bill provides flexibility to the Director of the Customs Agency, allowing them, if necessary for humanitarian or technological reasons related to maintaining the continuous operation of Neochim (a major fertilizers, inorganic and organic chemical products plant in Southeast Bulgaria), to authorize the export of limited quantities of the restricted products at their discretion. 

In the plenary hall, the bill was supported by GERB-UDF, Continue the Change - Democratic Bulgaria (CC-DB), MRF - New Beginning, BSP - United Left, There Is Such A People (TISP), the Alliance of Rights and Freedoms and two independent MPs. Velichie voted against it, while Vazrazhdane and MECh abstained. 

Parliament tasked the Director of the Customs Agency with enforcing the ban on the export of petroleum products, and the Executive Director of the National Revenue Agency with enforcing the ban on intra-Community supplies.

The Director of the Customs Agency may, however, authorize specific exports or intra-Community supplies of petroleum products listed in the ban in certain cases, provided that they notify the National Assembly of each authorization. Authorization shall take effect within seven days of notification and the National Assembly may, at any time, amend or revoke authorization issued to protect state and public security.

Additionally, Parliament instructed the head of the State Agency for State Reserves and Wartime Stocks to inspect the quantities stored under the Crude Oil and Petroleum Products Stocks Act within one week. This was suggested by Stanislav Anastasov (MRF - New Beginning).

During the debate on the bill, the opposition accused the incumbents of causing panic by tabling such a bill on Friday afternoon. The ruling party reassured that the state reserve has sufficient stocks in accordance with the requirements of the law and emphasized that the measure to restrict exports is preventive, in the interest of national security. It was necessary because of the observed trend of increasing fuel exports to countries, especially in the region, where prices are higher.

At the start of the debate, Bogdan Bogdanov MP of Continue the Change - Democratic Bulgaria (CC-DB) said that at the moment, there is a panic reaction to restrict fuel exports from Bulgaria, based on a provision that formally declares a state of emergency in Bulgaria. According to him, the bigger issue is the 90-day reserve that operators are required to maintain, 50% of which must be kept in Bulgaria and 50% outside the country. The question is how these reserves will reach Bulgaria if necessary, and how prices will not rise as high as in the region.

Assen Vassilev MP of CC-DB asked whether the incumbents have discussed the ban with the EU to ensure there will not be countermeasures for fuel imports from Europe. "Currently, 50% of Bulgaria's reserves are abroad. If we limit our exports to the Netherlands, Hungary, and other EU countries, can we be sure that if we need these reserves, they will not restrict them as a countermeasure, thus putting our reserves at risk," he continued. "Your behaviour betrays panic because you probably do not have a plan and do not know what to do," the former finance minister told the Government. 

According to Tsoncho Ganev MP of Vazrazhdane, the power holders wanted to snatch Lukoil's business but forgot that nothing depends on them. "The serious violations in the state reserve are becoming apparent; Bulgaria must purchase the refinery [in Burgas]; it must be Bulgarian," Ganev argued. In his words, the state reserves will last for seven days to meet the country's fuel needs. "You are trying to hide the crisis in which you are putting us," the opposition MP told the incumbents. 

Yordan Tsonev of MRF - New Beginning said: "Every drop we have in storage in another European country will be returned when our country wants it." He also said that they are monitoring the fuel markets and how the sanctions against Russian companies Lukoil and Rosneft are affecting the fuel prices in Europe. There is significant danger not only to Bulgaria but other European countries as well where the two sanctioned companies have assets, for supply chains to be interrupted, resulting in a problem on the fuel markets. "In this case, we are obliged to take such preventive measures when there is a danger. Analysis of public data showed a trend towards a serious increase in exports to markets where there is already a fuel shortage, such as Serbia, for example. This prompted the Government to take this step today. There is no panic about fuel in Bulgaria, there is no evidence that we have reserves for less time, but to be sure, we are also proposing an inspection of reserves, as we believe that the law has not been violated," Tsonev explained.

Krasimir Manov of MECh said that the ruling majority has no control over what is happening.