Page 15 - EurOil Week 47 2022

EurOil EurOil

the oil price cap to new sanctions. They argue In October, the EC also said that Lukoil production.
that the ninth sanctions package is not ready cannot export petroleum products produced Local production accounts for around
yet and including measures, such as oil price from Russian oil from Bulgaria. However, the one-third of MOL Group’s upstream portfolio
caps, would make the negotiations more caretaker government claimed the position of at present.
difficult. the EC was misinterpreted by local media. The company has spent HUF133bn
The ninth EU sanctions package is The government in Sofia insists that the (€324mn) in the last five years to look for new
expected to focus on individual listings, fuels were produced outside Russia therefore exploration sites to keep production at current
hitting Russian officials, propagandists, they are not under sanctions. levels and plans to plough close to HUF 200bn
executives, and other figures, two EU officials Lukoil Neftohim Bulgaria joined the Lukoil into upstream investment in Hungary in the
told Politico, reports LRT.lt, the website of group in 1999. It is the largest oil refinery coming five years. Between 60% and 65%
Lithuanian public broadcaster LRT. in the Balkans and it was built so that it can will go toward gas and 20-25% toward crude
only refine Russian oil. However, the former production.
government led by Kiril Petkov said the MOL raided its Ebitda guidance to of
Bulgaria accepts Lukoil’s offer refinery could adjust its equipment to produce €4.1bn-4.4bn after posting Ebitda of €953mn
in Q3 and €3.6bn in Q1-Q3.
fuels from oil imported from other countries.
for tax in exchange for EU was criticised by pro-Western analysts and
The government’s agreement with Lukoil
Bulgaria’s caretaker government has accepted politicians, who have accused President Turkey to ‘start work in new
an offer from Lukoil Neftochim Bulgaria to Rumen Radev of acting as a “foreign trade
start paying taxes to the country as of January bureau for Russian President Vladimir Putin”. year’ on Moscow’s gas hub
2023 if Sofia agrees to sell its products on In Bulgaria, the president appoints caretaker
the EU market, the government said in a governments. proposal
statement. Since the start of the Russian war in
The offer from the Russia-owned refinery Ukraine, Radev has been positioning himself Turkey expects to start working on the
is highly controversial as it could breach the as increasingly pro-Russian. The caretaker creation of a gas hub corresponding to a
EU sanctions regime. government which took office in the proposal from Moscow at the beginning of
The intermediary company in the oil trade beginning of August, seems to have the same 2023, Turkish Energy and Natural Resources
for Bulgaria is the Swiss-registered company political and economic aspirations and is Minister Fatih Donmez told NTV on
Litasco, which is a majority shareholder in trying hard to return Bulgaria back to Russian November 18.
Lukoil Neftochim Bulgaria. It buys crude oil political and energy orbit. “We plan to define the roadmap until the
from Russia’s Lukoil and sells it to the refinery end of the year. And to start works under the
in Bulgaria. In this way, the payment of taxes project from the beginning of 2023, “ Donmez
in Bulgaria is avoided and Russia retains most MOL makes oil discovery on said, according to Prime news agency.
of the profit. The minister said that Turkey is in
According to the agreement between the outskirts of Budapest negotiations with several potential gas
government and Lukoil Neftochim Bulgaria, suppliers. Apart from Russia, Azerbaijan and
the refinery can sell its products in the EU Hungarian oil and gas company MOL Turkmenistan have been mentioned on the
until the end of 2024 as long as it starts paying announced the discovery of a “significant market as potential suppliers of gas to the hub.
profit taxes in Bulgaria. amount” of crude oil on the outskirts of the Russian President Vladimir Putin and
“We have achieved a very important step capital. Turkish counterpart Recep Tayyip Erdogan
– from January 1, 2023, Lukoil will transfer MOL made the discovery at a depth have ordered their officials to work on the
all production, revenues, and taxes to be of 2,100m on the edge of Vecses during creation of a gas hub in Turkey swiftly and in
paid in Bulgaria, and not, as it was before, in exploratory drilling that started in July. detail.
the Netherlands or Switzerland,” Bulgaria’s Production at the new well is starting at 600 Erdogan and Putin envisage the hub
caretaker Deputy Prime Minister Hristo barrels a day, but is expected to rise to 700- providing gas to Europe, at least partly taking
Alexiev said as quoted in the statement. 1,000 later. on capacities that were once earmarked for
He added that the agreement, along The discovery could boost Mol the now apparently abandoned Nord Stream
with the 33% additional tax on excessive Magyarorszag’s hydrocarbon production by pipelines running to Germany. However,
profits, would bring a significant revenue to around 10% and total crude production in to achieve that they might have to work
the Bulgarian budget, estimated at around Hungary by 5%. on achieving some European disunity—in
€350mn for 2023. Alexiev also said the funds The well, MOL’s third-biggest in Hungary, response to Russia’s war in Ukraine and
would be used to support vulnerable groups. is capable of offsetting the decline in politicising of its gas supply to Europe, the
However, in order to secure that, Lukoil production at the company’s field in Algyo EU is working on entirely moving away from
Neftochim would need Russian oil, Alexiev southeast Hungary. reliance on Russian gas such as by bringing in
also said. Bulgaria was allowed in June to keep Crude from the well, which started American, Middle Eastern and other liquefied
buying oil from Russia for two years so that it producing on November 11, is being shipped natural gas (LNG) to gasification terminals
can get enough time for the Lukoil Neftochim directly to MOL’s main Danube Refinery, that are being built in Germany and other
refinery to adjust its equipment to produce south of the capital. countries.
fuels from liquified natural gas. But the EC MOL chairman-CEO Zsolt Hernadi said Donmez in early November told TRT
has repeatedly pointed out that this oil can “every drop” of crude exploited in Hungary Haber that Ankara might hold a gas hub
only be used within the country and not sold contributes to reducing the country’s energy project conference for gas suppliers and
in the EU. dependence. He added that MOL plans buyers.
On November 22, Radio Free Europe further drilling in the field. Putin has said gas prices could be set at the
quoted an EU spokesperson as saying that the MOL produced 3.5mn barrels of crude hub rather than in Russia and that he believes
deal would breach the EU sanctions as fuels in Hungary last year, about half of the total some European countries could be persuaded
produced by Lukoil with oil imported from exploited in the country. It also produced 1.4 to sign contracts.
Russia cannot be sold outside Bulgaria. bcm of gas, around 90% of total domestic

Week 47 28•November•2022 www. NEWSBASE .com P15