Russia Gains a Billion Euro from Bulgaria’s Oil Exoneration
Despite sanctions on Russia, it still earned €1 billion from its oil exoneration, thanks to Bulgaria.
Profiting from Bulgaria’s Oil Exoneration
Russia received several different sanctions when it started invading Ukraine in February last year. In December of the same year, the European Commission (EU) allowed Bulgaria an exoneration or immunity against Russia. It could purchase crude Russian oil until the end of next year. The aim is not to make Bulgarian citizens take the rap for its shortage.
The indemnity doesn’t provide for the Lukoil refinery near Burgas to refine the fuel and market it internationally for profit. However, Bulgarian authorities cashed in on the oil exoneration and let millions of Russian oil barrels reach the refinery.
The modus operandi allowed Lukoil to export them as refined fuels, reaching other EU member countries. From March to July 2023, the refinery sold almost 3 million barrels of fuel internationally, possibly from Russia.
Legally speaking, it doesn’t violate the sanctions according to experts. Lukoil took advantage of the discrepancies due to the vagueness of European rules. It includes what counts as trade, what kind of fuels Bulgaria can export and if it can be stored, and how the Commission gathers data.
EU nations started demanding Brussels do something and close those flaws. Three diplomats suggested the Commission analyse the absolution option for the Balkan State before the adoption of the 12th package of sanctions against Russia, expected to come in a few days. One of the diplomats says that if the exemption was intended to help Bulgarians to survive, it means they have failed.
Earning at the Expense of Others
With Bulgaria exempted from the sanctions that Russia is dealing with, the Kremlin makes its move to produce money to add to its war chest. The inadequacies in the rule raised sufficient revenue to fund the Wagner Mercenary Group for one year.
“At the very least they should tighten the sanctions and tighten the derogation regime. But the most optimal thing to do is just to get rid of this derogation,” said Delyan Dobrev, chairman of the energy committee in Bulgaria’s parliament.
Under the EU sanction rules, Bulgaria can’t sell oil products internationally. However, this Balkan state permits exports as long as it’s for Ukraine’s exclusive use or they can’t store it because of environmental and safety risks unless their sale, supply, transfer, or export won’t evade sanctions.
The rule prohibits Bulgaria from exporting oil products to EU countries coming from Russia, except if they’re sending it to Ukraine.
According to Bulgarian Finance Minister Asen Vasilev, the refinery has only 10-day worth of storage capacity. He added the exemption from sanction would likewise help in raising up to €250 million in taxes for the government.
Russia to Lift Fuel Export Ban Next Week
On September 21, Russia announced its ban on fuel exports to address high domestic prices and scarcities. It already mitigated restrictions on October 6, permitting diesel export by pipeline, but kept restrictions on gasoline exports. Moreover, it banned overseas supplies of gasoline through trucks and railways.
Energy Minister Nikolai Shulginov, the country was planning to lift the export ban on some grades of gasoline.
“They promised to lift the export ban next week. In regards to this promise, we have formed an export schedule and a plan for refining,” said an unnamed industry source.
According to Deputy Prime Minister Alexander Novak, Russia would carry on with an additional voluntary supply cut of 300,000 barrels a day from its crude oil and petroleum product exports till the end of December.