The decision by Washington to include Lukoil and Rosneft on the sanctions blacklist has thrown EU countries where the two largest Russian oil companies are present into chaos. They are trying to prevent fuel supply disruptions before the sanctions take effect on November 21.
Romania and Bulgaria are in a race against time to prevent the closure of their critical oil refineries owned by Lukoil before the US sanctions against the Russian owners come into force at the end of this month.
One of the options being considered by Bucharest is to request a waiver to extend the deadline for implementing the sanctions, according to Politico.
On Friday, Bulgarian lawmakers approved a new bill that would allow the government to appoint an administrator for the Burgas refinery owned by Lukoil, granting the administrator extensive powers to take operational control of the facility, approve its sale, and nationalize it if necessary. Meanwhile, the country is exploring options to request a sanctions exemption.
Romania – where Lukoil's Petrotel refinery is located – has not yet made an official decision. However, Bucharest is also considering requesting an "extension of the deadline for implementing the sanctions" while formulating its own response, a high-ranking government official told Politico on condition of anonymity. Nationalization is considered a "last resort," he added.
Nevertheless, Romanian Energy Minister Bogdan-Gruia Ivan told Politico that Bucharest is "operationally prepared" for any scenario. The government's plan will focus on maintaining "economic activity in Romania, while at the same time ceasing financing to the Russian Federation," he added.
The US Treasury – which must approve any takeover – and the European Commission declined to comment.
Efforts to secure a new owner for the refineries have been further questioned after Thursday, the Swiss trading company Gunvor withdrew its offer to acquire Lukoil's international assets, including Petrotel and gas stations in Romania, following severe criticism from the US Treasury regarding the sale offer.
The new measures also impact other EU countries. Germany has obtained a six-month waiver for the Schwedt refinery owned by Rosneft, which will be under government control from 2022. Hungarian Prime Minister Viktor Orbán traveled to Washington on Friday and obtained an exemption for Russia's oil imports through pipelines for his country and neighboring Slovakia.
The sanctions come as President Donald Trump becomes increasingly frustrated with the failed efforts to achieve a ceasefire in Ukraine. The EU has intensified its campaign in recent months to end the bloc's dependency on Moscow in terms of energy.
Closing Lukoil would affect Moldova's supply
From a technical standpoint, obtaining waivers or appointing a state-supported administrator for refineries should not be a problem, according to Politico.
However, the most pessimistic scenario – in which refineries cease operations – would have very different consequences for the two countries.
For Bulgaria, where the Russian-owned refinery supplies up to 80% of the country's fuel needs, Sofia would be left without supply "by the end of the year," said Martin Vladimirov, a senior analyst at the Center for the Study of Democracy think tank.
The facility in Romania supplies about 20% of the country's fuel, explained Ana Otilia Nuţu, an energy analyst at the Expert Forum think tank. A closure would therefore cause "a few months" of slight price increases, she said, as the country rushes to find replacement imports. However, the closure could affect exports to neighboring Moldova, Nuţu added. And "if Moldova is severely affected, then it will be another huge PR opportunity for Russia," the analyst emphasizes.
On Friday, the Moldovan government presented its own proposal to purchase Lukoil's assets in the country, including an aviation fuel depot, and stated that it had requested an extension of the sanctions from Washington.
Mikhail Krutikhin, co-founder of the consulting company RusEnergy and a Russian expert in the energy industry, believes that the facilities should be able to "continue to operate" safely as long as the future owner retains existing staff and hires additional experts.