Bulgaria’s parliament voted on July 21 to take control of an oil terminal controlled by Lukoil, marking the latest move against the company’s business within the EU by national authorities.

Lawmakers in the 240-seat parliament voted 144 in favour of a bill that would end Lukoil’s concession to run the Rosenets oil terminal near the Black Sea port of Burgas. Lukoil will be able to continue operating the facility after the concession expires, which is expected to happen within a week, but it must pay fees to the Bulgarian government to do so.

Lukoil has controlled the facility since 2011, when the private oil firm secured a 35-year concession. It exclusively supplies crude to the 196,000 barrel per day (bpd) Neftochim Burgas refinery, which is also under Lukoil’s umbrella.

Lukoil could also lose that asset, though, after Bulgarian lawmakers voted in January to enable the government to take over the operation of the plant for up to a year.

Justifying the latest move, Bulgaria’s ruling centre-right GERB, We Continue the Chance-Democratic Bulgaria (PP-DB) and Movement for Rights and Freedoms parties said that terminating Lukoil’s concession would prevent Russia from financing its war in Ukraine with proceeds from Bulgarian facilities. Lukoil has no state-owned shareholders, although as Russia’s second-biggest oil producer, it is a significant contributor to the country’s budget through taxation.

Ending the concession will also help enforce EU sanctions and support Bulgaria’s bid for Schengen membership, PP-DB co-chair Kiril Petkov said ahead of the vote. Bulgaria hopes its Schengen bid will be approved as early as this autumn.

“Our strategic goal is to enter Schengen and this is a big step towards it,” Petkov said. “This …. is also in line with EU’s sanctions” against Moscow.

The Lukoil Neftochim refinery issued a statement on July 20 saying it would seek legal protection against the parliament’s decision. On July 19, Bulgaria’s pro-Russian President Rumen Radev also criticised the move, describing it as “yet another rushed and wrong idea of political leaders”.

Relatively unscathed

Compared with Russia’s largest state-owned energy companies Gazprom and Rosneft, Lukoil’s assets in Europe have been relatively unaffected by the fallout from the conflict in Ukraine. Politico attributed this in a report in January to the company’s strong lobbying network in Europe.

While Gazprom had its gas sales assets in Germany and elsewhere seized, and Rosneft lost its refining interests in the same country, Lukoil continues to operate hundreds of filling stations across Europe, two refineries in Bulgaria and Romania, and a 45% stake in a third one in the Netherlands. It also controls a trading arm based in Geneva, called Litasco.

In Bulgaria, Lukoil is still able to bring ashore Russian oil in spite of an EU embargo on seaborne crude imports from the country announced in December last year, as local authorities were able to secure a two-year derogation, after citing the negative impact on Bulgarian energy security.

However, facing difficulties with crude procurement as a result of EU sanctions, Lukoil closed the sale of its ISAB oil refinery on the Italian island of Sicily to G.O.I. Energy in May. It was also reported in the Romanian press earlier this year that Kazakhstan’s state-owned KazMunayGas (KMG) had reached a deal to buy Lukoil’s more than 300 filling stations in Romania.

Lukoil could also sell its refinery in Romania, local media reported in January, as well as its retail fuel operations in Moldova.

Litasco has also been hit hard by the crisis in relations between Russia and the West, with banks withdrawing their credit lines and Lukoil being forced to spend reportedly over $1bn to clear the subsidiary’s credit lines. The trader has moved part of its trading operations to Dubai.

In what appeared a pragmatic move to distance itself from the Kremlin, Lukoil was the only Russian energy company to post a statement in March last year calling for an end to the conflict in Ukraine. However, it stopped short of condemning Moscow’s actions.

Furthermore, the company can hardly be considered in opposition to the Kremlin. In May last year, a month after stepping down as Lukoil’s CEO, its founder Vagit Alekperov received an Order of Merit to the Fatherland from Russian President Vladimir Putin, in apparent recognition of his loyalty to Moscow.