Russia's Lukoil seeks US sanctions extension as Bulgaria moves to take control of refinery

Russian energy giant Lukoil has formally requested an extension to the US Treasury’s November 21 deadline that bans all transactions with the company, three sources familiar with the matter confirmed.

The US Treasury’s Office of Foreign Assets Control (OFAC) imposed new sanctions last month on Lukoil and Rosneft, escalating economic pressure on Russian President Vladimir Putin amid Moscow’s ongoing war in Ukraine. Alongside the sanctions, OFAC issued a general license permitting companies to complete existing transactions with Lukoil before the deadline, Reuters reports.

Sources told reporters that Lukoil is seeking an extension to allow additional time to finalize ongoing commitments and evaluate bids for its extensive global network of oil and gas production, refining, and trading assets. Both Lukoil and OFAC have so far declined to comment on the matter.

Lukoil, which contributes around 2% of the world’s oil output, announced on October 27 that it was seeking buyers for its international assets and might pursue an extension of the OFAC license if necessary. A proposed deal to sell its overseas holdings to Swiss commodities trader Gunvor fell through earlier this month after Washington signaled its opposition.

The company’s international operations have since been severely disrupted, leading it to declare force majeure at Iraq’s West Qurna 2 oilfield, its largest foreign project.

Meanwhile, the sanctions’ repercussions are being felt across Europe, particularly in Bulgaria, where Lukoil operates the Burgas refinery, a network of petrol stations, and fuel storage facilities.

On November 13, the Bulgarian Parliament overrode President Rumen Radev’s veto of a bill allowing the government to assume control of Lukoil’s refinery and, if necessary, sell it to protect the asset from impending US sanctions.

The legislation, approved last week, grants a government-appointed commercial manager authority to oversee the refinery’s continued operations beyond the November 21 sanctions deadline. President Radev had vetoed the measure a day earlier, warning that it lacked safeguards against potential financial claims against the state.

Parliament rejected his objections by 128 votes to 59, according to Bulgarian media.

The US sanctions have raised concerns about Bulgaria’s winter fuel security, prompting the government to seek a coordinated response. Ahead of November 13 vote, Boyko Borissov, former prime minister and leader of the ruling GERB party, expressed optimism that Bulgaria might secure a US extension for Lukoil’s operations as early as next week.

“Together with the government, we are working so that both the people in the refinery and the refinery itself work well,” Bulgarian media quoted Borissov as saying.

By Vafa Guliyeva