Kazakh group KazMunayGas, owner of the Petromidia refinery, has submitted a bid to take over the Bulgarian refinery of the Russian group Lukoil, several sources close to the negotiations told Bloomberg.
According to them, the Swiss company Litasco SA, the international marketing and trading division of the Lukoil group, which officially owns the Lukoil Neftohim refinery in Burgas, has already accepted binding offers from several potential bidders, one of which is KazMunayGas. The Kazakh company is in talks with Vitol Group, the world’s largest independent oil trader and a major player in Kazakhstan, to finance a possible acquisition of the Burgas refinery, according to Agerpres.
KazMunayGas expects the bidding process to last about a month, one of the sources said. The price could be around $1 billion, and even if the Swiss company Litasco SA is not subject to international sanctions, a condition for approving the deal would be a guarantee that the money received for the sale of the Bulgarian refinery will not be transferred to Russia, the source quoted by Bloomberg added.
Lukoil, Russia’s second-largest oil producer, is considering a possible sale of the Burgas refinery as early as 2023, citing “discriminatory legislation and other politically biased, incorrect decisions against the refinery.” This comes after Bulgaria decided to ban the import of Russian crude, as did other European countries after the invasion of Ukraine. As a result, the share of Kazakh crude processed in Bulgaria has reached 40%, with the rest coming from the Middle East.
Last month, Hungarian Prime Minister Viktor Orban said that Hungarian oil group Mol had also made a bid for Bulgaria’s Lukoil refinery.
Sources cited by Bloomberg say that KazMunayGas is seeking the support of the Bulgarian government for its bid, arguing that the Burgas refinery was designed to process Russian crude, which is of similar quality to Kazakh oil. If its bid is successful, KazMunayGas says it will supply Kazakh crude on the best possible terms to the Burgas refinery, and stresses that other bidders cannot offer such a stable supply.
The Bulgarian government is “closely monitoring the process, but cannot have a direct involvement in the ownership swap, as there is currently a private majority shareholder,” Bulgarian Energy Minister Vladimir Malinov said in late December.
KazMunayGas Group is the majority shareholder of KMG International, a company that owns and operates major operations in the refining, petrochemical, retail and trading sectors on several international markets. KMG International’s retail network includes over 1,100 fuel filling stations in Romania, Georgia, Bulgaria and the Republic of Moldova.
The significant shareholders of Rompetrol Rafinare are KMG International (54.63% – directly and indirectly) and the Romanian state, through the Ministry of Energy (44.7%).