Oil from Russia via the Black Sea (and the oil from “south” (Middle East, “The bay” and Africa) will be welcomed and received from refineries in Turkey and added value – the profit from the refining and production of petroleum products – will be reported there. With the remark, that Central and Eastern Europe will pay the bill for this – let's just say the Balkans. This was predicted by the chairman of the Bulgarian Oil and Gas Association Zivodar Terziev in an interview with Dir.bg and 3e-news.net. The expert also expresses concern regarding diesel fuel supplies. As for the prices – Zivodar Terziev's hope is, that on holidays they will be lower. The chairman of BPGA is categorical, that the refinery in Burgas should work optimally. Any risks of closure, suspension or limitation of the activity are related to national security and energy collapse of the state and the region, is categorical Terziev.
– Mr. Terziev, how will the decision to cap the price for the transportation of Russian oil by sea affect, the contract is for a level of 60 dollars per barrel. How will this affect the European market??
– A decision on the Russian oil price ceiling has already been made and the level has been set 60 dollars per barrel, which will be revised on 3 the month. This decision is political, and precisely for this reason the relevant assessment for projection on the markets is difficult as of today. On the one hand, we have restrictive measures for revenues in Russia's budget from oil exports, which should ensure lower oil prices on world markets. On the other hand, the previously announced reaction of the Russian Federation to limit supplies to countries is expected, accepted and signed this decision, which will further stress oil markets.
In any case, the supply of oil from Russia to Europe has been stopped since 05.12.2022 G., and there is a similar restriction on finished oil products from Russian oil, counted from 05. 02. 2023 G., which is a reduction in supply for EU buyers. It makes perfect sense when reducing shipping options, prices to move in the direction of increase, but given the huge amounts of oil and oil products, stored in the warehouses of European refiners and traders, This will happen, possibly, through 2023 year.
The big concern of the whole of Europe is regarding the diesel fuel product (gas oil), main source of energy in transport, in industry and heat production. In recent years, EU countries have chosen to close a number of refineries on the continent, by receiving finished refined products (diesel fuel – gas oil) precisely from Russia. It seems, that this will be a major difficulty in the coming months and will test those held by Europe.
– Various studies point to, that the diversion of Russian crude oil flows has now ended, but what does this mean for the market especially on a regional scale?
– In parallel with the decisions on EU restrictions, Russia is also looking (and probably finds) appropriate alternatives to get out of the difficult geopolitical task. For years there has been talk of Asian corridors of Russian oil and gas and a long-term partnership with Russia for the countries of East and South Asia, these are markets with unlimited consumption and opportunity.
About the regional projection, it is related to nearby countries, not included in the Russian oil embargo, and in particular Turkey, Kazakhstan, Azerbaijan (and not only), which participate traditionally in the European markets (as suppliers of finished petroleum products) and have the ability to supply Russian oil and its corresponding processing in refineries on their territories. It is precisely such countries that will be privileged to increase their exports to Europe, at the same time, with the realization of profits exceeding the usual ones. Turkey will realize the greatest commercial interest from the circumstances that have arisen in the region, as increasingly companies, registered in our southern neighbor offer deliveries of finished products in subsequent periods (2023 G. – 2024 G.) for European countries. It turns out, that oil from Russia via the Black Sea (and the oil from “south” (Middle East, “The bay” and Africa) will be welcomed and received from refineries in Turkey and added value – the profit from the refining and production of petroleum products will be accounted for there, with the remark, that Central and Eastern Europe will pay the bill for this, let's just say the Balkans.
Bulgaria received a derogation for the delivery of Russian oil by sea, which enables the refinery in Burgas to produce the necessary quantities to satisfy the domestic market. At the same time, we are monitoring various legislative initiatives, aimed at interfering with the operation of the refinery. How will this affect fuel prices and, in particular, the supply of diesel fuel in Bulgaria, and in the region?
Changes to the Regulation 833 from 04.06.2022 (version 6,0) for “ban on Russian oil” must be considered globally (by spirit and idea), but at the same time it is necessary to reflect the specificities of each of the affected countries. As such, Bulgaria got its exception (derogation) without further restrictions (which are a fact for Hungary when receiving Russian oil through pipes), which gives us the right to export finished products, which after its refinement by “any” are oil (and this is beyond doubt and comment) originating in Bulgaria and the EU.
When the energy committee discussed the imported projects regarding fuels from “We continue the Change” and GERB-SDS, you said, that you are confused. How do you define legislative initiatives in the fuel sector?
– BPGA has always had a clear position on the discussed national topics and we have offered good solutions for the state and the consumer. Unfortunately, today we are confused by so many different political proposals and we can hardly help to make the right decision for Bulgaria, as it is expert , and the voices of the experts in today's situation, they are not heard at the moment.
For the latter 5 years, we have tried more than once to put the pressing problems before parliament and cabinet in the aspect of national energy security, dangers, challenges and opportunities, but pressured by topical issues and in search of consumer solutions (price) topics politicians did not find time and desire for “the big talk”, which we lack today and this creates a vacuum in the understanding and ideas of the responsible political factors. It is this vacuum in the discussion on “the problems of oil” is the basis for multidirectional political talk, reason for the mixed signals being broadcast through the relevant bills, some of which are inapplicable or simply unsuitable. Thus, we lost valuable time for the sector, as instead of defining a common goal, to draw a single plan and accordingly a timetable for getting out of our difficult situation, the state chose to proceed “the price one” (the social) topic in fuels, to seek a temporary reduction in prices, which in the short term and given the political instability seems about right, but in the horizon of 2024-2025 year and the difficult adaptation in a situation of limited Russian supplies seems dangerous to me.
The bills in parliament today are, as relatives, at first look, both contradictory, and each subsequent one asks new questions, instead of finding answers. We have a modern refinery in Burgas, which should work, optimally at that, for which a guaranteed supply of oil is necessary, ensuring clear funding, guarantees of transparency and adequacy in pricing, objective taxation of the activity and the income from this activity, and the horizon for this should be in the following minimums 10-12 years. Any risks of closure, suspension or limitation of the activity are related to national security and energy collapse of the state and the region.
– The caretaker government stated, that it will continue, but in a different form with the discount (now from 25 Art. per liter) for fuel prices in Bulgaria. Have talks been held with you and what can we expect in this direction after 1 January 2023 G.?
– Over the past months, we have taken part in several discussions on the subject “reduce fuel prices”. The government allocated an additional tranche of 38 million. leva according to the current until 31.12.2022 year help from 25 pennies per liter to individuals, which will close the year under the current scheme (discount on payment). Here the business has done its job perfectly, for which I thank all colleagues and partners, and on the part of the state, all commitments have been fulfilled on time and accurately. But this cannot and cannot continue for everyone forever. Considered by 01.01. 2023 year the aid provided by 25 pennies is discontinued, and in the first months of the new year, a new support model will be offered.
By regulation 1854 from October 2022 year and with changes under the ZKPO, the excess profits of several economic entities in the state will be taxed, one of which is the refinery in Burgas. The funds thus collected are subject to distribution according to expediency. We discussed and supported before the government the imposition of a new support model in the fuel and transport sector, and the state should define target groups of the needy – socially weak groups, energy poor individuals, large families, disabled people, others in need, to receive targeted financial assistance in the form of vouchers and/or other means of payment, making the use more widespread and accessible to more persons.
– Mr. Terziev, what should be the initiatives at the state level, so that there is a balance, which, on the one hand, does not interfere with business, and on the other hand, to benefit the users?
– It is most important to define our state priorities in the sector in a short period of time. The price topic and the fight for the lowest prices is important, but this forces us to forget about a liberal market, for the free entrepreneurial initiative, which will adversely affect the industry and the consumer within the 2 years. We have been proposing for years to talk about global problems and define them nationally, responsibly and with a plan to overcome them. We have proposed to several governments that we initiate a conversation about needs, about the problems and dangers facing the sector, with ready-made solutions and ideas for energy security. Unfortunately, the political climate of our time has not set an agenda, to put us at the table in a conversation about the future, and it is increasingly unclear.
– Should we expect surprises on the fuel market in Bulgaria and in what direction next year??
– Today, a year is a huge period. It is difficult to predict the direction in February, March or April, what is left for a whole year?! There will certainly be surprises, if the Burgas refinery and its functioning are put at risk. For this reason, solutions and guarantees for a busy work regime must be sought, high efficiency and priority production of diesel fuels, and commitment to the country's budget!
Of course, the upcoming decisions of politicians and managers will be important for the future of the fuel user in the country, as they must be wise, and not populist.
It should rate well in the medium term (the next ones 2-3 years) do we build the rules in the industry on principled decisions and faithfully set national goals, by standing up for them and fighting for them, or we hope for chance events in history, by empowering others to decide for us. This also applies to blind decisions and regulations from Europe, so too for those solutions, which are offered to us from Moscow.
– Do you have a forecast in which direction fuel prices will move?
I strongly hope that we will meet the Christmas and New Year holidays with lower prices than those in November. At the same time, there are interesting days ahead for the industry and any news, any new circumstance in the sector will directly affect the final prices.
Happy holidays to our customers, and we will continue to supply the energy for their cars in 2023 as well.