Lukoil Bulgaria claims it can legally export fuels to the EU

1 year ago 55

Some types of fuel made from Russian oil can be exported to the EU under current rules, Lukoil Bulgaria said on Thursday, denying accusations of violating international oil sanctions against Russia.

The comment came from the Deputy Chairman of the Supervisory Board of Lukoil Bulgaria, Alexander Velichkov, who on Thursday dismissed as “another fuss about Lukoil” comments that Lukoil had circumvented the oil embargo.

“There was no illegal export of fuels to EU markets. One tanker was carrying low-octane petrol and was transhipped off the coast of Malta – a procedure allowed by the EU for the offshore area there and used by many businesses. There is no infringement, and the second tanker is a delivery at the port in Rotterdam of an oil product that is not covered by the sanctions”, the representative of Lukoil said at a conference of the Institute for Energy Management in Sofia.

Low-octane gasoline has a customs code of 27079999, and EU rules prohibit the export of products under numbers 2709 and 2010.

However, petroleum oils and other products obtained from the distillation of high-temperature coal tars and similar products in which the weight of the aromatic constituents exceeds that of the non-aromatic constituents are invoiced under code 27079999, an investigation by Euractiv Bulgaria has found.

The EU rules allow for the export of low-octane gasoline – one of the products obtained during oil processing.

Burgas alone could meet Bulgaria’s annual consumption of 2.5-3 million tonnes per year, as 50-60% of the Burgas refinery’s total annual processing of 7 million tonnes is already exported.

Indeed, it was revealed on Thursday that the Bulgarian refinery exports fuel worth around €1 billion across the world, a report published by Global Witness, the Center for Research on Energy and Clean Air, as well as the Bulgarian think-tank Center for the Study of Democracy (CSD) shows.

CSD leading analyst Martin Vladimirov explained that the scheme involves European ports to transfer the fuel to other ships so that they reach their final destination.

“There are also two specific cases where there is an import of Bulgarian fuels produced with Russian oil in Rotterdam, the Netherlands. Also, transfer of Bulgarian fuels produced with Russian oil to Florida,” Vladimirov explained.

Bulgarian Prime Minister Nikolay Denkov commented on the topic after a meeting with EU Chief Prosecutor Laura Codruța Kövesi, who visited Bulgaria on Thursday.

Denkov noted that one of the topics discussed was that there are no texts in the Criminal Code related to the violation of sanctions, so “the very registration of the violation will lead to the corresponding punishments” – a topic he has already discussed with Justice Minister Atanas Slavov.

Bulgaria is already preparing the coordination mechanism to monitor compliance with sanctions, as required under an EU directive.

“When we came to power, it turned out that there was no movement in this direction, there was no established mechanism. We started to create it a month, a month and a half ago, so it is already in preparation,” Denkov explained.

“What should and can be done is to act according to the laws. Where the laws are weak, they should be improved,” Denkov added.

After Denkov met with Kövesi, it was announced that Bulgaria supported the Franco-German initiative to extend the European Prosecutor’s Office’s powers to investigate the evasion of sanctions against Russia.

Bulgaria has a derogation from the EU oil embargo against Russia until the end of 2024 but has announced that it will end three months earlier.

Denkov asserted that the government had done what was within its powers – to significantly increase the taxes that Lukoil must pay to reduce the excess profits and funds that go to Russia to finance the war in Ukraine.

Lukoil Bulgaria denies that it has illegally benefited from the exemption because it was granted for objective reasons – no other producer of aviation fuel exists in the region.

According to the company, terminating the exemption would have the exact opposite effect – not only would Russia’s revenues not decrease, but they would increase.

(Emiliya Milcheva, Krassen Nikolov | Euractiv.bg)