Kazakhstan’s state-owned KazMunayGas National Co. JSC is in talks to acquire the Bulgarian refinery of Russia’s Lukoil PJSC, according to sources familiar with the negotiations. Litasco SA, the main shareholder of Lukoil Neftohim Burgas AD, has already received binding offers from several potential buyers, with KazMunayGas among them. The Kazakh company is reportedly discussing financing options for the purchase with Vitol Group, a global oil trading giant and a significant player in Kazakhstan’s oil sector.
This potential acquisition follows growing European demand for Kazakh crude since Russia’s invasion of Ukraine. European refineries have increasingly relied on Kazakh oil, with imports rising to around 80% of the oil shipped via the Caspian Pipeline Consortium, compared to approximately 50% before the war. In 2023, Bulgaria banned Russian oil imports in alignment with broader European sanctions, leading to a surge in Kazakh crude processed at the Lukoil refinery, which now processes around 40% Kazakh oil, with the remainder coming from the Middle East.
KazMunayGas, which already operates the Petromidia refinery in Romania, is expected to complete the sale process within a month. The reported purchase price for the Bulgarian refinery is around $1 billion. A key condition of the sale is that the transaction guarantees no funds are transferred to Russia, despite Litasco not being subject to sanctions.
Analysts view the acquisition positively. Jonathan Lamb from Wood & Co. notes that the deal would create synergies in the regional downstream market and allow KazMunayGas to refine its own crude, potentially boosting refining margins in Kazakhstan, which are government-regulated. The acquisition would more than double KazMunayGas’ refining capacity in Europe, alongside its existing Petromidia plant. The refinery’s recent $1.5 billion upgrade, including the installation of a residue hydrocracker in 2015, further adds value to the deal.
Lukoil, Russia’s second-largest oil company, has been considering selling the Burgas refinery and its associated fuel retail business in Bulgaria since 2023, citing unfavorable political conditions. Hungary’s Mol Nyrt. is also reportedly bidding for the refinery, according to Hungarian Prime Minister Viktor Orban. KazMunayGas is seeking support from the Bulgarian government, emphasizing that the refinery is designed to process Russian-grade oil similar to Kazakh crude and that its stable supply offers a competitive advantage over other bids.
While the Bulgarian government is monitoring the process, Energy Minister Vladimir Malinov stated that it cannot directly intervene in the ownership change, as the refinery currently has a majority private owner. KazMunayGas and Lukoil have previously collaborated on oil field developments in the Caspian Sea, with Lukoil holding stakes in key Kazakh oil ventures such as Tengizchevroil and Karachaganak Petroleum Operating B.V.
