"FUEL EMERGENCY": EUROPE FACES A PROBABLE ENERGY CRISIS DUE TO THE UNITED STATES

Major European oil refineries are at risk of closure due to sanctions imposed by Washington on Russia's Lukoil. A major gas station chain has closed in Finland, and Bulgaria and Romania are rushing to address the situation. Risks have also emerged for the global energy market. RIA Novosti reports on the situation in detail.

At the end of October, the US Treasury Department included Rosneft, Lukoil, and 34 of their subsidiaries in the latest sanctions package. All transactions with these companies must be completed by November 21. Lukoil International GmbH, owner of Lukoil's foreign operations, initially considered acquiring the oil trading company Gunvor. However, it later withdrew the offer due to pressure from Washington.

Lukoil International owns the Burgas refinery, which covers 80% of Bulgaria's fuel needs, and Petrotel-Lukoil in Ploieşti, which supplies 25% of Romania's fuel needs. This company also supplies products to Moldova. Both refineries are now at risk of closure.

Sofia has already banned the export of certain types of fuel, primarily diesel and aviation fuel, to other EU countries.

Bulgaria and Romania are considering their options.

One option is to place the refinery under temporary state management. The Bulgarian parliament has passed a law allowing the appointment of a special director at Neftohim Burgas. President Rumen Radev attempted to veto the measure, citing constitutional risks and potential financial demands on the state. However, lawmakers overrode the veto with an overwhelming majority.

The closure of the refinery risks causing price increases and disruptions at service stations, with repercussions on transportation, agriculture, and industry. Furthermore, it will result in a loss of jobs and tax revenues in the Burgas region, where the refinery is a key activity, notes Dmitry Skryabin, portfolio manager at Alfa Capital Asset Management.

In Romania, action is slower. The acquisition of Lukoil's assets is likely. Nationalization, as Bucharest emphasized, would be an "extreme measure."

According to President Nicusor Dan, the government has created a task force to find the best solution for the plant, which includes the Petrotel refinery, but "no one is in a hurry." Nor is there any pressure to ask the Americans to extend the sanctions. After all, in addition to Petrotel, there are Petromidia and Petrobrazi, so the situation in Romania is not as dire as in Bulgaria, explains Skryabin.

There are precedents for temporary state management, lasting three to six months, followed by a subsequent sale.

This is what Germany did with Rosneft's assets in 2022, and Italy with the ISAB refinery in Sicily, recalls Vadim Petrov, a member of the Intersessional Financial Advisory Group (IFAG) of the UNESCO IOC.

"The authorities will prevent the closure of the refineries, find a new owner among allied countries (for example, Kazakhstan's KMG, Hungary's MOL, and Azerbaijan's SOCAR have already expressed interest in Burgas), and remove the assets from Lukoil's control. This will allow formal compliance with the sanctions without having to close the refineries," explains the analyst.

The Netherlands is also considering selling Lukoil's stake. In 2009, the Russian company acquired a 45% stake in the Zeeland refinery in the southwest of the country. A Politico source described this move as "very likely.".

The International Energy Agency (IEA) has warned that sanctions against Russian oil companies pose a risk to the entire global market.

The IEA report highlights operational disruptions that have already occurred. Lukoil has declared force majeure at one of the world's largest oil fields, West Qurna-2 in Iraq, as the country's authorities have suspended payments to the company. This will complicate the situation in Eastern European energy markets.

The aggressive measures by the US Treasury (the first major energy sanctions of Trump's second term) add to the 19th EU sanctions package, adopted at the end of October, which bans Russian LNG imports starting in January 2027. Furthermore, short-term contracts expire within six months.

In Germany, diesel prices have already risen by 25%, and in Bavaria, gas station prices have reached record highs following the energy crisis.

"Traders are stocking up on diesel fuel from the United States and the Middle East, but premiums are rising rapidly: ICE Gasoil futures have soared. Supplies will also be reduced due to the EU ban on Russian crude oil starting in January," says Evgeny Sumarokov, associate professor in the Department of International Trade at the Government Financial University of the Russian Federation.