Bulgaria’s Strategic Blind Spot: Lukoil and the Illusion of “Business as Usual”

Bulgaria’s most serious problem today is not the state of Lukoil’s assets or even our broader energy dependency. It is our chronic inability to build even minimal strategic unity on issues where no party can “win” and no politician can claim personal glory. Lukoil Neftochim is precisely such a case. Here, partisan maneuvering is not only counterproductive – it is dangerous.

There was never any mystery around the U.S. and UK–sanctions-related derogations. The unusual part is that Bulgaria secured a much longer transition period – until April 2029. But this immediately raises a central question: what will we do with the time we’ve been given? Will the government once again serve as a façade of Russian strategic posturing and run down the clock, or will we finally use this window to facilitate a transition to non-Russian ownership? The fact that senior government figures are already seeking yet another extension beyond April 2026 suggests they do not expect any real long-term solution in the next six months.

Assisting Lukoil keep the assets or selling them?

If Bulgaria intends to help Lukoil retain ownership while merely operating the facilities, and securing sanctions’ compliance by blocking direct cashflows to Moscow, it will confirm – beyond doubt – that the country’s political elite refuses to confront the core flaw in Bulgarian energy policy over the past 26 years: the illusion that we can be a loyal EU and NATO member while maintaining strategic commercial ties with their principal geopolitical adversary – an adversary whose actions are coercive, erratic, and increasingly hostile. Anyone expecting a quick return to “biz as usual” anytime soon with Moscow simply misunderstands Russian history and the imperial logic that drives Kremlin policy.

The war in Ukraine has eliminated any illusion that peaceful coexistence and normal trade with Putin’s Russia is possible. Every Russian state or quasi-private asset carries political and security risk – and that geopolitical risk is ultimately borne by Bulgarian consumers and taxpayers.

A controlled transition away from Russian ownership is therefore not optional; it is a must. But such a transition demands a clear strategy, political will, and a cool head. Empty slogans, impulsive anti-Russian theatrics, or institutional bravado will only produce “grey rhinos” – high-probability, high-impact crises that we will claim we never saw coming.

Peevski’s failure to install his preferred candidate, Petko Nikolov, as special administrator exposed the limits of his influence when geopolitics enters the equation. But that does not mean he will recalibrate. On the contrary – he is unlikely to step back.

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This leaves Bulgaria at a strategic crossroads. Should we wait passively for a grand bargain over Lukoil’s global assets, or should we shape the process ourselves? Given the fragmentation of our political class and the absence of resolve, the instinct will be to wait—and keep kicking the can down the road.

Putin sells not Lukoil

But the expectation of a “static picture” and a future global deal is fundamentally unrealistic. Knowing Putin, such a deal is highly unlikely. Lukoil is now a distressed asset; any sale would fetch only a fraction of its earlier value. More critically, if Lukoil loses its international operations, the company becomes unsustainable inside Russia itself. In moments of political transition in Moscow, new elites invariably pull strategic assets back under their control. For the Kremlin, giving up its largest foreign assets-channels of influence and sources of off-the-books financing for intelligence operations – would constitute a strategic self-inflicted wound.

Another dangerous illusion is that the decision to sell Lukoil’s assets is made at the corporate level. Regardless of whether we are dealing with a state-owned or a nominally private company, decisions of this magnitude are not taken in the executive office but in the Kremlin and on Smolenskaya Square. In wartime, Moscow often prefers to go to extremes rather than choose what would be rational from a market perspective – to sell.

It is equally plausible that the Kremlin may choose the opposite strategy: shutting down refineries and freezing other overseas assets in order to trigger fuel-market shocks and generate social discontent, protests, and even unrest. The purpose of such a scenario would be obvious — to channel public anger toward the United States and the EU and to create political pressure on member states.

There are precedents. There was no economic logic in Gazprom voluntarily abandoning its vast European market and its stable revenues. But Putin did it, solely to “punish” Europe. The logic today is the same: if the Kremlin decides that the geopolitical damage inflicted on Europe is more valuable than the market price of the assets, it will not hesitate. The loss of USD 22–25 billion — the approximate value of Lukoil’s foreign assets — is not personal to him, nor is it an economic argument that could deter him. All the more so given that there is no scenario in which he would receive any part of that money.

Derogation extensions will be limited

The notion that repeated derogations will automatically lead to a sale is pure wishful thinking.

This is Bulgaria’s dilemma. On one hand, the country lacks leaders willing to bear the politically high costs of removing Russian ownership from its largest industrial asset—and, by extension, of phasing out Russian gas. On the other hand, much of the political system remains captive to perhaps the most accomplished political opportunist in modern Bulgarian history: Delyan Peevski.

Claims that major Western companies — including strategic investors — are not interested in Lukoil’s assets have the same credibility as earlier assertions that the refinery could process only Russian crude. There are genuine and well-documented U.S. and EU interests, and the evidence is straightforward.

The obstacle is not on the buyers’ side. The real problem is that parts of Bulgaria’s political and business elite remain unable — or unwilling — to sever the umbilical cord that ties them to Russia, a conduit through which autocracy, corruption, and nepotism continue to flow. This is not a historical accident; it is the structural glue binding together the current governing system.

Hence the persistent drive to preserve business links with Russia — links that sustain this derivative Kremlin-style model of governance and entrench its grip on power.

There is ample time—until April 2026. But time is only useful if one uses it. The question is not whether the transition away from Russian ownership will eventually happen. It will. The real question is whether Bulgaria will shape that process—or be shaped by forces entirely beyond its control.

Ilian Vassilev