Bulgaria, Lukoil Neftochim Burgas and Lukoil Bulgaria will move their business

, SEE Energy News

According to Bulgarian Deputy Prime Minister Hristo Aleksiev, as of 1 January 2023, Lukoil Neftochim Burgas and Lukoil Bulgaria will move their business, revenues and taxes to Bulgaria from the Netherlands and Switzerland.

Namely, Lukoil has agreed to start paying its taxes in Bulgaria on condition that it is allowed to keep processing predominantly Russian oil and export its petroleum products.

Last year, Lukoil Neftochim Burgas paid around 1.78 million euros in taxes to the Bulgarian state. The profits tax payment by the company is expected at around 50 million euros this year and 300-350 million next year. Currently, Lukoil pays a minimum profits tax in Bulgaria because the profit is transferred to its parent company Litasco, which is registered in Switzerland.

The tax revenues in question will be generated by a 10 % corporate tax on the refinery’s actual profit and a 33 % temporary solidarity contribution on the difference between the tax profit for 2022 and the so-called surplus profits.

Aleksiev explained that the additional budget revenues will be spent on fuel price compensations for citizens and businesses, for which the Government will take the necessary steps. He added that the Government’s decision is in line with the European Commission directives on the import of Russian oil. The re-export of crude oil remains strictly forbidden, but the import of petroleum product is allowed. This will help Bulgaria’s foreign-trade balance, and turn it into a fuel exporter from a fuel importer. Bulgaria’s fuel prices are the lowest in the EU, and they are also lower than the prices in Serbia and Greece, Aleksiev said, adding that the Government is taxing the difference between the price of Brent and Urals. There is nothing political about this decision, it is strictly economic.

Chairman of the Management Board of Lukoil Neftochim Burgas Ilshat Sharafutdinov said that it is fair that the taxes on the companies’ activities should stay in Bulgaria. The Burgas refinery has been operating under this scheme since 2020, so that the financial revenues could stay in Bulgaria.

This year Lukoil Neftochim Bulgaria will process a record high volume of crude oil: 6.6 million tons until December and 7.1 million tons until the end of the year. Some 50-55 % of the output is exported, which means that the refinery cannot operate if the export of petroleum products is restricted. If such restrictions are imposed, Lukoil will consider the closure of the refinery, Sharafutdinov concluded.