Kazakhstan’s state-owned oil and gas company, JSC KazMunayGas, is participating in a competitive tender to acquire the Bulgaria-based refinery of Russian oil giant PJSC Lukoil, according to sources familiar with the negotiations, Bloomberg reports.
The sale process, currently underway, has attracted multiple bidders, with Litasco SA—the primary shareholder of Lukoil Neftochim Burgas AD—having accepted binding offers from several interested buyers, including KazMunayGas.
Individuals with knowledge of the negotiations, who requested anonymity due to the private nature of the talks, confirmed these developments.
Financing Discussions with Vitol Group
To facilitate the potential acquisition, KazMunayGas is in talks with Vitol Group, the world’s largest independent oil trader and a significant business partner in Kazakhstan, regarding financing arrangements. The transaction, if completed, is expected to be valued at around $1 billion.
One source indicated that the sale process could take approximately a month. While Litasco is not subject to international sanctions, a crucial condition of the sale is ensuring that the proceeds will not be transferred to Russia.
KazMunayGas, Lukoil, and Bulgaria’s Ministry of Energy have not yet responded to requests for comment. A spokesperson for Vitol declined to provide a statement.
Bulgaria’s Shift Away from Russian Oil
This potential acquisition comes amid Bulgaria’s efforts to reduce dependence on Russian crude oil. In 2023, the country implemented a ban on imports of Russian oil, aligning with broader European Union policies following Moscow’s invasion of Ukraine.
Consequently, Kazakh crude now accounts for approximately 40% of the oil refined in Bulgaria, with the remainder sourced from the Middle East.
Lukoil, Russia’s second-largest oil producer, has been considering divesting from its Bulgarian assets since 2023.
The company cited “discriminatory laws and other unfair, biased political decisions against the refinery” as key factors influencing its decision to exit the Bulgarian market.
The Neftochim Burgas refinery, located on the Black Sea coast, is the largest in Southeast Europe and plays a critical role in Bulgaria’s fuel supply.
Strategic Importance of the Refinery
Acquiring the refinery would mark a significant strategic expansion for KazMunayGas, strengthening its foothold in the European energy market. The company, which manages Kazakhstan’s extensive hydrocarbon resources, is actively seeking opportunities to enhance its refining and export capabilities.
For Bulgaria, a change in refinery ownership could lead to shifts in the country’s energy landscape, potentially affecting fuel prices, supply chains, and long-term trade relationships.
As negotiations continue, industry experts and policymakers will be closely monitoring the outcome of the sale, given its potential economic and geopolitical implications.
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