Why is Radev’s caretaker cabinet preparing to lift restrictions on Neftohim’s fuel exports?
Photo: BGNES
The News Story
According to 24 Hours, close to the government media, the caretaker government will lift the ban on Lukoil’s exports of fuels produced from Russian oil outside Bulgaria. The media has referred to a draft decision of the Council of Ministers submitted by the finance, energy and economy ministers and signed by Prime Minister Donev.
The overall context
There is currently a deepening crisis for diesel in Europe and the world, which allows speculative and highly profitable transactions, especially when the value chain of cheap crude oil and refinery is in place. For example, Russian Urals crude trades at a discount of $ 23-24 per barrel, making it the cheapest in Europe, appropriate for lucrative deals with diesel.
Bulgarian consumers can see for themselves – by visiting gas stations. According to the site bg.fuelo.net, the price differential between regular A-95 gasoline and regular diesel tops a record BGL 0,40 per litter (A-95 costs BGL 2.95/l, and regular diesel BGL 3.35/l).
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The analysis
Recent trade statistics confirm that Bulgaria exports significant fuel quantities via EU countries to Ukraine. However, the Petkov government imposed restrictions on fuel export which do not cover the territory of EU countries and therefore do not affect fuel exports to Ukraine.
But they thwart the traditional export of diesel by Litasco and Bulgarian brokers to Turkey.
Diesel exports contribute to a more significant spread between diesel and gasoline prices that the interim government would most likely attribute to the ‘market’.
If taken, this decision by Radev’s caretaker government would unleash greater diesel exports to Istanbul.
Further evidence
At the moment of writing this analysis, at the Rosenets oil and fuel terminal, the 100,000-tonne crude oil tanker Amax Arrow is docked. It unloads Russian Urals crude oil, on which Litasco owes Urals-Brent discounts above $ 17 million, which it will not pay. Right behind the crude oil tanker, a 25,000-tonne chemical and fuel tanker Lucky Lady is moored, loading diesel for the Istanbul market.
Thus, the EU derogation on oil and refined products translates into a complete scheme of transfer of sanctioned Russian oil into sanctioned fuels under the Bulgarian government’s protection helps the Russian company Lukoil.
The question remains, Cui Bono?
For sure, not the Bulgarian budget nor Bulgarian consumers.
Ilian Vassilev
