Wrap-up

site.btaUPDATED Government's Security Council Confirms March 1, 2024 as Earliest Possible Date for Revocation of Russian Oil Derogation

Government's Security Council Confirms March 1, 2024 as Earliest Possible Date for Revocation of Russian Oil Derogation
Government's Security Council Confirms March 1, 2024 as Earliest Possible Date for Revocation of Russian Oil Derogation
Prime Minister Nikolay Denkov briefs the media after an extraordinary meeting of the Government's Security Council, Sofia, November 16, 2023 (BTA Photo)

Bulgarian Prime Minister Nikolay Denkov on Thursday convened an extraordinary meeting of the Government's Security Council in connection with a bill moved by Delyan Dobrev MP of GERB-UDF on November 10 that would revoke an exception to a EU-imposed ban on processing oil originating in Russia within three days. Dobrev's proposal came in the wake of an international report alleging that fuel exports through Bulgaria and the Russian-controlled Lukoil Neftochim Burgas refinery had generated EUR 1 billion in tax revenue to the Kremlin.

The meeting was attended by National Assembly Chair Rosen Zhelyazkov, Parliamentary Energy Committee Chair Delyan Dobrev, Foreign Policy Committee Chair and GERB leader Boyko Borissov, European Affairs Committee Chair and Continue the Change (CC) Co-leader Kiril Petkov, Economic Policy Committee Chair Hamid Hamid, GERB Floor Leader Dessislava Atanassova, and Movement for Rights and Freedoms (MRF) Floor Leader Delyan Peevski.

The State Agency for National Security (SANS), the State Intelligence Agency (SIA) and the Military Intelligence Service (MIS) presented reports on the effects and risks to national security if the bill is voted through and the refinery in Burgas is no longer able to process substantially cheaper oil originating from Russia.

In 2022, the European Commission granted Bulgaria a derogation from the EU embargo on oil imports from Russia due to the country's specific geographic exposure. Under the effective legislation, the exemption is to be revoked on October 1, 2024, three months ahead of the initial December 31, 2024 deadline.

GERB and the MRF want the derogation to be revoked sooner, even immediately. Continue the Change - Democratic Bulgaria (CC-DB) argue that the earliest possible date for lifting the exemption is March 1, 2024.

At its 3.5-hour long meeting, the Council considered two options for an earlier removal of the exemption: December 31, 2023 or March 1, 2024. Ultimately, March 1, 2024 was confirmed as the earliest possible date for the revocation by the State's special representative at Lukoil because of technological risks.

Later in the day, Parliament rejected Dobrev's bill by a vote of 94 in favour, 55 against and 61 abstentions.

Atanasova and Peevski walked out of the Security Council meeting before its end, and Peevski followed suit a little later. 

Round-up of Comments

Prime Minister Nikolay Denkov (talking to the media after the meeting): Any shortening of the deadline for removing Lukoil's exemption heightens the risk of fuel price spikes. The shortest possible deadlines for phasing out Russian oil are: after December 31, 2023, when Lukoil Neftochim Burgas will use no more than 50% of Russian oil; after January 31, 2024, for no more than 25% of Russian oil; and March 1, 2024, after which the refinery will use only non-Russian oil. The Security Council considered all risks and ways to minimize them. One risk discussed concerned the refinery's ability to operate so that it would not shut down if it does not receive oil. The second risk is what could happen in the fuel market if the refinery's capacity is reduced or if it shuts down. Russian oil must be phased out because switching to non-Russian oil overnight spells technological risks. The Security Council decision confirms the conclusions in an August 29, 2023 report by the ministers of economy and industry and of energy in coordination with the ministers of finance and transport and the heads of the SANS, the MID and the SIA. Fuel price spikes are a cause for concern. That is why in the timeframe provided in the previous report we minimized the risks in such a way that there was no danger of fuel price increases. At the moment, with the [proposed] shortening of the deadlines, this risk is significantly increased. We would not be having this conversation if a proposal to end the derogation in three days had not been tabled in the National Assembly. If it had not been for this bill, there would also have been no danger of fuel price hikes and rumours of possible fuel shortages. All this is possible because someone does not care about these risks. The Security Council's decisions were made on the basis of an expert discussion of the risks and there were no political considerations. If there were any, we would have sought a deadline for lifting the Lukoil exemption during the term in office of Mariya Gabriel [as Prime Minister], while March 1 is still within the term of the current Cabinet. [Commenting on the premature departure of the GERB and MRF representatives] If someone is looking for political appearances, one of the ways is to leave this meeting angry.

Kiril Petkov (emerging from the meeting): Scrapping the derogation before March 1, 2024 poses risks. The CC-DB coalition is ready to revise its initial proposal for abolishing the derogation by March 15, with a new date not earlier than March 1. Taking action before March would pose huge and unjustified risks. This is not based on our opinion but on reports from all the services and ministries. Regardless of the political rhetoric that will be expressed in the coming days, we will defend Bulgarian citizens' interest. That is our only priority in this case. At the same time, we favour stopping cash flows to Putin and his government as soon as possible, but this must not be done at the expense of unjustified risks to the Bulgarian people. [Commenting on the early departure of GERB-UDF and MRF representatives] It was important for me to stay until the end of the meeting so as to hear all expert opinions before I finalize my opinion on our political behaviour in Parliament. In my opinion, every MP is obliged to get all the objective information before making a decision. By leaving early, they largely missed much of the information that was reported. GERB-UDF and the MRF are trying to set a political trap by alleging that CC-DB is coalescing with the Bulgarian Socialist Party (BSP) and Vazrazhdane by voting the same as them in favour of continuing the derogation. If we are responsible to the Bulgarian public and meet the deadlines recommended by the experts, we will be accused of protecting Russian interests. If we are not responsible and the prices at the pump rise for all Bulgarian citizens, our Government risks being blamed for this. In other words, this trap is being used both ways so that we suffer political losses.

Delyan Peevski (on his way into the meeting): We'll negotiate about the deadline, but the derogation for Russian oil must go immediately. Each day during which Putin's regime is financed is harmful. We hope that sense will come to the Prime Minister and CC, so it won't be seen that they are financing Putin.

Desislava Atanasova (emerging from the meeting): It would be completely pointless for us to stay because all the fears we have voiced for many months were confirmed by the security services' reports. It emerged that Lukoil was ready to switch to all non-Russian oil as of yesterday, but that changed abruptly after [Tuesday's] Energy Committee sitting and it is still refining a huge percentage of Russian oil. It became clear that deliveries of non-Russian, non-Urals crude oil are possible. This comes as no surprise to us, and it would be a waste of time to stay at this impromptu Security Council which confirms everything we have been saying for the last year and a half.

Delyan Dobrev (emerging from the meeting): Lukoil Neftochim could have switched to non-Russian oil as of yesterday, while operating at reduced capacity, which would still have met the country's requirements. It emerged from the meeting that although the EU sanctions and the derogation allow refined oil products of Russian origin to be sold only in Bulgaria and in Ukraine, over 50% of Lukoil's products are exported worldwide. The cargo of dozens of tankers is transferred at sea and their destination is not known. This is a huge scandal. I am sure this will be further investigated. We have referred this type of deals, which contravene the exemption and the sanctions, to the prosecution service and the SANS. We can see that Lukoil acts in line with the way certain parties vote. I will name them now. Our proposal was rejected in the Energy Committee by BSP for Bulgaria and Vazrazhdane, which voted against or abstained, which is not a surprise, and by CC, which is not a surprise, either. The surprise came from Democratic Bulgaria, who explain on television that they are in favour of scrapping the derogation but vote against or abstain.

Atanasova and Dobrev were referring to a sitting of the parliamentary Energy Committee on Tuesday at which it voted, 5-4 with 5 abstentions, to reject Dobrev's bill.

Delyan Peevski (emerging from the meeting): An extremely useless meeting, a waste of time for us. We did not hear any arguments why this derogation should stay and not be stopped. [Referring to the decision to keep the derogation until March 2024:] The continued derogation is to blame for funding the criminal Russian regime with hundreds of millions from Bulgaria. It became obvious that there will be a vote in Parliament. CC-DB [Continue the Change - Democratic Bulgaria] said that they will defend their March deadline. We'll see how the vote goes and whether the Bulgarian Parliament and Government are run from Moscow. The National Customs Agency has violated the sanctions against Russia, as it failed to control where Russian oil was sent. On Friday the MRF will alert the prosecution service and the SANS about this monstrous scam. The Bulgarian people were completely wronged by this derogation and got nothing from it, while the criminal Russian regime enriched itself under the benevolent gaze of the Bulgarian Government. A new coalition - Putin coalition, will be formed by Vazrazhdane, the BSP and CC.

President Rumen Radev: All analyses and estimates show that a rushed removal of the deroagtion results in an unjustified risk of fuel scarcity and a price spike. While Parliament and the Government are trifling with power, a number of strongly destructive processes are unfolding. We ourselves are ruining our power industry and economy. We are cutting off our European perspective, and we ourselves are sabotaging our own national priorities.

Vice President Iliana Iotova: The way the meeting took place raised doubts and mistrust over the Security Council. The meeting set a serious precedent as Atanasova, Dobrev and Peevski walked out. This is evidence of a deep rift in the self-styled quasi-coalition, now on national security matters. If Bulgaria is suspected of conducting a state policy of circumventing the sanctions, this will be yet another argument in the hands of the EU partners who are not particularly keen on this country's Schengen accession. No convincing enough arguments were heard for either option for an end to the derogation: by December 31, 2023 or by March 15, 2024. I do not even know why it should be March 15 and not March 1, or the end of 2023.

/LG/

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