Lukoil's Bulgaria refinery to halt completely Friday

28th July 2011, Comments 0 comments

Bulgaria's sole oil refinery, Russian-owned Lukoil Neftochim Burgas, will halt its production completely on Friday amid a licencing row, company officials said Thursday.

Any restart would take at least a month, they added, but the government vowed the move would not cause fuel shortages.

"We have undertaken final actions to halt operations at the refinery. It will be shut completely within 20 to 30 hours," Neftochim supervisory board member and Lukoil Bulgaria executive Valentin Zlatev told a news conference.

Any subsequent restart would take between one and one-and-a-half months, Neftochim chief Sergey Andronov added.

Neither official predicted a quick resolution of the dispute, that saw Bulgaria's customs agency this week strip the refinery of two key licences, effectively blocking its operations.

The agency's decision was prompted by Neftochim's failure to install additional fuel metres and other equipment to link its production and storage warehouses to the Bulgarian revenue agency.

The move blocking the refinery's operations was part of a drive by the government to tackle widespread corruption, an issue which has raised concern in the European Union.

Zlatev charged on Thursday that both Neftochim and the customs agency knew the deadlines could not be met because of the complexity of the job and were negotiating a postponement by the end of the year.

"The revenue agency and the customs are even now monitoring every gram of petroleum that enters Neftochim and every gram of petroleum products that exits the refinery," Zlatev said Thursday.

"We are not importing fuels, we are producing them here and accusing us of contraband is absurd," he added, while promising to move on with the new installations and "put in maximum effort to finish by the end of the year."

Neftochim is Bulgaria's leading producer and supplier of fuels with a capacity of 142,00 barrels per day.

Lukoil also has the second largest petrol station chain in the country with about 200 branches and also exports fuel to neighbouring Serbia, Macedonia, Greece and Turkey.

The news of the refinery shutdown sparked speculation about a possible fuel crisis in the country at the height of the holiday season.

Finance Minister Simeon Djankov assured Thursday that retailers sould be able to fully supply the market through higher imports.

"Our petrol stations have enough stocks to go for another 20 to 30 days," Zlatev confirmed Thursday.

He added that Lukoil Bulgaria was already looking into ways of starting supply from a refinery in neighbouring Romania.

© 2011 AFP

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