Bulgaria's largest refinery secretly helps Russia sell oil on world markets, investigation finds

Neftochim Burgas, the largest oil refinery in Bulgaria, abusing the exception granted on purchasing Russian oil, helps Russia sell oil on world markets.

Source: A joint investigation by the Global Witness, the Centre for Research on Energy and Clean Air (CREA), and the Center for the Study of Democracy (CSD).

The investigation showed that the oil refinery has already brought approximately EUR 1.1 billion in taxes to the Russian budget.

After the European Union introduced sanctions against Russian oil, an exception was made for Bulgaria, which was explained by the country's national security regarding the energy supply.

The exception provided that Bulgaria cannot resell imported Russian oil to other countries. At the same time, data from 2023 showed that the country's energy security cannot explain the amount of oil purchased by Bulgaria.

Bulgaria has become the fourth-largest buyer of Russian crude oil transported by sea, behind India, China and Türkiye.

The investigation revealed that instead of simply meeting domestic demand, the Neftochim Burgas refinery began using the Bulgarian exemption to facilitate the sale of Russian oil on world markets.

The logic of this company's actions is easy to explain if one considers that the refinery is majority-owned and operated by the Russian fossil fuel giant Lukoil.

CREA analysts estimate that seaborne exports of petroleum products through Bulgaria alone are valued at EUR 984 million in the first 10 months of 2023.

Quote: "While EU countries feel the embargo’s pinch, Burgas is buying steeply discounted Russian crude from Lukoil and selling refined products on the global market," the investigators said.

At the same time, the Kremlin receives a double benefit from the trade organised through Burgas: once in the form of taxes levied on the production and export of oil bought by the refinery, and from taxes paid by Lukoil, the second-largest company in Russia and the ultimate owner of 99% of the Neftochim Burgas oil refinery.

Eurostat data show that Bulgaria exported 304,000 tonnes of petroleum products to the EU  from March to July 2023. The oil refinery Neftochim Burgas imported 2.1 million tonnes of Russian oil and only 216,000 tonnes of non-Russian oil during the same period.

The investigators also do not rule out that two smaller Bulgarian oil refineries are also involved in re-exporting Russian oil.

At the same time, some oil refining products that Bulgaria exported to Romania (which accounts for 52% of all EU exports) might have been sent directly to Ukraine.

Burgas not only created a back door for Russian oil to the EU. The refinery also exports to other jurisdictions embargoed on Russian oil, such as the United States. Shipping data show that the US has imported more than 70,000 tonnes of petroleum products from Burgas this year.

At the same time, Eurostat data also show that a large amount of oil products, the volume of which is difficult to explain, was exported without specifying the country of destination.

Lukoil says that Russian oil is necessary for the uninterrupted plant operation in Burgas.

However, shipment data seen by Global Witness and CREA show that before Russia invaded Ukraine, the refinery had a variety of sources of supply, including the Middle East, North Africa and Europe. At the same time, today such alternatives have drastically decreased.

In addition, the investigation indicated that loopholes in oil refining help circumvent Western sanctions, when oil that was transported outside of Russia is being processed into products such as diesel fuel or petrol and then legally imported around the world.

"Western embargoes on Russian oil were meant to shatter Kremlin revenues and hinder its ability to wage war on Ukraine. But today, Russia continues to export its most lucrative commodity at pre-war levels," the investigators concluded.

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