While the Bulgarian government is embarking on a useless political game with Russia, the State Railways and the country’s airport are already using fuel from the strategic reserve to stay in operation. (All Images Copyright by Mariela Zamfirova & Johann Brandstatter)
After the last week of July’s saga over the revocation of Lukoil’s license on the grounds of lack of fuel-metering equipment, the only fuel refinery in the country stopped operations on 30 July. The Burgas-based refinery’s capacity is 8.8 million tons per year. Lukoil provides approximately 50-70% of the petroleum products market in Bulgaria and the company’s retail chain has more than 150 gas stations. If Lukoil has to relaunch refinery’s operations it will need two – three months. Bulgarian authorities apparently refused to extend the date for installation of the fuel-metering equipment necessary for the calculation of the excise tax. Last week, a spokesperson of Lukoil hinted that they were left with the impression that the term had been agreed and extended. However, this was not the case.
Stocks of jet fuel at the airports in the Bulgarian Black Sea cities of Varna and Burgas are still sufficient, the airports operate under normal conditions with all regular and charter flights being on time, according to Bulgarian bTV. The 1,800 tons of kerosene, unblocked from the state reserve, have been delivered and should cover the demand for a week. According to the authorities, the state reserve for jet fuel covers 60 to 68 days and the quantities of gasoline are enough for 80 days.
Late last week, Oleg Durov, head of the Refining and Petrochemical Department of Lukoil arrived in Sofia, for talks with the Bulgarian authorities but was not received by government officials. “Such negotiations are useless,” Bulgaria’s Finance Minister Simeon Dyankov said on Bulgarian TV.
Lukoil Bulgaria has informed the Bulgarian State Railways that it is halting supply of diesel fuel to the Railway Company, BDZ. According to an anonymous official in the transport ministry, the BDZ owes Lukoil 1.29 million Euro.
Economy and Energy Minister Traykov and Finance Minister Djankov, have repeatedly said that Bulgaria is not on the brink of a fuel crisis, but BDZ is already in dire straits because it has a contract with Lukoil as an exclusive supplier. Should the State Railways start negotiations with alternative suppliers, it could be sued for breach of the contract.
The Bulgarian State Railways can get enough fuel from the state reserve to keep going for 15 days and at the moment is trying to secure enough money to pay the debt to Lukoil.
Ministers Dyankov and Traykov count on import from abroad to secure normal supplies for gas stations while the interior ministry will continue to receive fuel that has already been ordered from Lukoil for another month. Russia’s Kommersant newspaper wrote that the Bulgarian government has already started negotiations with Greece and Romania. Apparently, there is spare capacity and the necessary infrastructure to supply fuel from these countries but it is not clear whether the supply can make up for the closure of the Lukoil Neftochim refinery.
The Minister of Economy and Energy said there is no fuel crisis in the country, except for jet fuel, which is a problem and a commitment of Lukoil Aviation, whose license has not been revoked. Traycho Traykov reiterated the commitment of Lukoil Neftochim, which had 15 months to install the electronic measuring devices, and failed to do so.
Amid of the growing fuel crisis, Minister of Economy and Energy Traycho Traykov told the Bulgarian National Radio that Bulgaria’s government expects Russia’s state nuclear company Atomstroyexport to withdraw its EUR 58 M claim at an arbitration court over delayed payments for its work on two nuclear reactors in Belene nuclear power plant. According to the minister the withdrawal is likely to become a fact in a few days. Two weeks ago Russia’s state nuclear company Atomstroyexport took Bulgaria’s NEK to an arbitration court for EUR 58 M over delayed payments for its work on two nuclear reactors.
Meanwhile, a total of 7,000 Lukoil employees are in danger of loosing their jobs at the Balkans largest oil refinery in Burgas. According to our information about 50% of them have outstanding bank loans.
(Sources: Middle East & Balkans News own research, bTV, Images by Mariela Zamfirova & Johann Brandstatter; 1 August 2011)