Bulgaria finds itself at the center of a high-stakes energy standoff as it races to keep its only oil refinery operational before sweeping U.S. sanctions on its Russian owner, Lukoil, take effect later this month. With the November 21 deadline looming, the Bulgarian parliament has moved swiftly, approving legal changes that grant a government-appointed manager extraordinary powers over the Lukoil-owned Burgas refinery on the Black Sea coast. The urgency comes as Bulgaria, like several other countries, scrambles to shield its vital energy infrastructure from the ripple effects of geopolitics and international sanctions.
According to AP and other major news outlets, the new amendments empower the state-appointed manager to oversee the refinery’s operations and, crucially, to sell its shares if necessary. This unprecedented step aims to ensure that the Burgas refinery—Bulgaria’s largest company and the biggest oil refinery in the Balkans—continues to function even if U.S. sanctions sever Lukoil’s access to international payments and supply chains. The plant, valued by experts at approximately 1.3 billion euros (about $1.5 billion), is a linchpin of Bulgaria’s economy, boasting a 2024 turnover of 4.7 billion euros ($5.4 billion) and controlling a near-monopoly on fuel distribution nationwide.
The urgency of these legal maneuvers was underscored after a top international commodities trader, Swiss-based Gunvor, abruptly dropped its plans to purchase Lukoil’s international assets. The collapse came on the heels of the U.S. Treasury labeling Gunvor a "Kremlin puppet" and signaling its opposition to the deal. As Reuters reported, the U.S. Treasury’s stark message was clear: "The stark Treasury message is a signal to the market that those gambling on a speedy normalisation of the Russian energy trade will be disappointed," said Geoffrey Pyatt, senior managing director at McLarty Associates and former U.S. assistant secretary of state for energy resources.
For Lukoil, the mounting pressure is evident. The company, which has stakes in oil and gas projects across 11 countries, including Bulgaria, Romania, Iraq, and gas stations throughout Europe, the Middle East, Africa, Central Asia, and Mexico, has publicly stated that it is selling its international assets in response to U.S. sanctions. These sanctions, imposed last month alongside those on Rosneft, are part of President Donald Trump’s administration’s efforts to push Russia into negotiations over its war in Ukraine. Lukoil, however, has rejected accusations of being a Kremlin puppet, claiming its asset sales are a direct response to the sanctions regime.
The stakes are high not just for Bulgaria, but for several countries where Lukoil operates. In neighboring Moldova, Energy Minister Dorin Junghietu announced that Lukoil would have to halt its operations there from November 21, unless Washington grants a temporary exemption to avoid disrupting the country’s fuel supply. "Lukoil owns a number of gasoline stations, supplies the oil market, and is the private owner of the airport's only fuel storage, supply, and aircraft refuelling facility," Junghietu told local media. Moldova, facing the prospect of fuel shortages, has asked the U.S. for a reprieve but has also rejected Lukoil’s offer to sell its airport infrastructure to another company.
In Finland, the impact of sanctions is already being felt. The Helsingin Sanomat newspaper reported that Teboil, a petrol station chain owned by Lukoil, is running low on fuel stocks. "We are running down our fuel stocks, which means some stations are already out of certain fuel types and the number of such stations is growing daily," said Toni Flyckt, Teboil’s marketing and communications director. The situation highlights how the U.S. sanctions are reverberating across Europe’s energy markets, threatening to disrupt not just supply chains but also the daily lives of consumers.
As for Bulgaria, the government’s move to seize control of the Burgas refinery is not without controversy. Opposition lawmakers warn of potential legal battles ahead. Ivaylo Mirchev, leader of the Democratic Bulgaria alliance, voiced strong criticism: "This person will be granted such extraordinary powers that, in the end, Lukoil will sue Bulgaria — and the money will end up in Russia." Despite these concerns, the ruling coalition argues the step is necessary to prevent the refinery’s shutdown, which would have devastating consequences for Bulgaria’s energy security and economy. The government maintains that the U.S. sanctions "will effectively lead to the shutdown of the refinery’s operations due to the refusal of all counterparties to make payments to Lukoil-owned companies."
Under the newly adopted rules, the special commercial manager can not only keep the refinery running but also sell it, with the proceeds placed in a restricted account in Lukoil’s name. However, Lukoil would be unable to access these funds, a measure intended to comply with international sanctions while keeping the refinery operational. Boyko Borissov, Bulgaria’s former prime minister and leader of the GERB party, explained to local media that these changes are designed to protect the refinery and the country’s energy interests.
Adding to the sense of urgency, Bulgaria last week imposed temporary restrictions on the export of petroleum products, including diesel and aviation fuel, even to other European Union members. This measure aims to ensure sufficient domestic supplies ahead of the new U.S. sanctions. The ban underscores the precariousness of Bulgaria’s energy situation and the government’s determination to avoid fuel shortages at home.
The Kremlin, for its part, has pushed back against the mounting international pressure. Kremlin spokesman Dmitry Peskov insisted that Lukoil’s legitimate interests should be respected, calling the sanctions "illegal." He stated, "We believe that all legitimate interests of a major international company, including a Russian one, like Lukoil, in terms of international trade and economic relations, must be respected." The Russian government has characterized the failed Gunvor deal as a commercial matter but remains adamant about defending the company’s rights on the global stage.
Analysts and oil executives predict that Lukoil will be forced to sell off its international assets at steep discounts by the U.S. Treasury’s November 21 deadline. The fate of the Burgas refinery, along with Lukoil’s other overseas holdings, remains uncertain as the clock ticks down. For Bulgaria, the coming weeks will reveal whether its bold legislative gambit can keep the country’s energy heart beating—or whether the standoff will plunge the Balkans’ largest refinery, and the nation itself, into crisis.
As the deadline approaches, Bulgaria’s struggle to balance sanctions compliance with national energy security is a vivid reminder of how global politics can reach deep into the daily workings of a country’s economy. The outcome will have far-reaching implications, not just for Bulgaria, but for the entire region’s energy future.
