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Hungary’s MOL set to displace Russia in the Balkan oil race
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At his end-of-year press conference, the Hungarian Prime Minister Viktor Orbán highlighted a unique economic opportunity: Russia’s Lukoil is putting up for sale one of the most important oil refineries in the Balkans, Burgas Neftochim. Hungary’s MOL is also taking part in the bidding and, as the only EU bidder, the prime minister believes it has a good chance of success. This transaction could be a significant step for Hungary, not only economically but also geopolitically.
According to Telex, Burgas Neftochim is one of the largest and most modern oil refineries in the Balkans, capable of processing seven million tonnes of oil per year. The refinery uses mainly oil from the Black Sea, transported by tanker, and plays a strategic role in the region’s energy supply. Lukoil bought the plant in 1999 and has since made a number of improvements, but the company’s position in Bulgaria has declined in recent years.
If MOL is successful in acquiring the refinery, it would not only expand its interests in Hungary, Slovakia and Croatia but could also become a key player in the Balkans’ energy supply. The move would give the Hungarian company a strategic advantage in regional markets.
International competition and political challenges
MOL’s chances are boosted by the fact that the Hungarian company is the only EU bidder for the refinery, but the international field is strong: the UK-Catar consortium Oryx Global and London-based DL Hudson were previously seen in the press as the favourites. Although Lukoil has not formally negotiated with them, Bulgarian media have reported that American and Azeri investors have also expressed interest in the deal. The race is not only economic but also political, as the success of the deal depends on the decision of the Bulgarian authorities and the reduction of Russian economic influence in the region.
Bulgaria has a long history of domestic political crises. In addition to parliamentary instability and frequent changes of government, the country’s economic and energy situation is uncertain. Currently, the most prominent political figures are the President of the Republic, Rumen Radev, and the leader of the GERB-SDS coalition, Boyko Borisov. The two politicians have different positions: while Radev is more pro-Russian, Borisov is seen as a supporter of Western integration.
So – MOL is also bidding, and our Mr. Orbán believes MOL makes a good chance DUE TO THE FACT they are the only EU bidder.
Ahhh … The advantages of the EU, as explained by our Politicians!
Rather like the failed Talgo acquisition, Hungarian capital is likely to be viewed with suspicion in this case too. Bulgaria is seeking to distance itself from Moscow and Budapest is rather too close to home, physically and metaphorically. A higher profile, higher prestige investor from the likes of the US or Middle East will be viewed as the preferred option and I suspect that competition will be fairly intense as the Burgas refinery is Bulgaria’s sole refinery with the advantage over others of being able to be supplied from the sea, ensuring affordable energy security.