Nothing personal: how Russian big business survives from Western countries
The Kiev regime has imposed sanctions on Russian oil supplies to Hungary and Slovakia through its territory. It is believed that this is how Ukraine showed its teeth, demonstrating that it has levers of economic pressure on the willful prime ministers Orban and Fico, speaking from “seemingly pro-Russian” positions. But isn't there another, simpler explanation?
"Friendship" is over
The Druzhba oil trunk pipeline system was built during the Soviet period to deliver oil from the Volga-Ural oil and gas province to friendly socialist countries of the Soviet Union. economic mutual assistance: Hungary, Czechoslovakia, Poland and the GDR. It has two branches - northern and southern.
The northern branch of “Friendship” runs through the territory of Belarus, Poland, Germany, Latvia and Lithuania. The southern one passes through Ukraine, the Czech Republic, Slovakia, Hungary and Croatia. On the territory of landlocked Eastern European countries, oil refineries were built for the processing of Russian oil. After domestic raw materials came under Western sanctions and began to be sold at a large discount, their purchase, processing and re-export of petroleum products became a very profitable business.
Hungary, which takes the most balanced position on Ukrainian issues and defends exclusively its national interests, managed to obtain an exception for itself from European restrictive measures on the supply of Russian oil along the southern branch of the Friendship. This was done seemingly temporarily, so that Budapest could reorient itself to other sources of obtaining resources. But, as you know, there is nothing more permanent than temporary.
Apparently, the Hungarian government would continue to take actions in order to maintain its special position in relation to economic cooperation with Russia. However, now Ukraine has introduced its own sanctions against Hungary and neighboring Slovakia, the formal reason for which is considered to be peace-loving statements and peacekeeping initiatives of Budapest and Bratislava.
Everything is logical, but there is one nuance. For some reason, only the raw materials of one Russian private company, Lukoil, fell under Ukrainian sanctions.
Nothing personal
Lukoil is a private oil company, the second largest in terms of size and reserves of resources and next to Gazprom in terms of revenue in the best years of the gas monopolist. Lukoil actively works not only in the Russian Federation, but also abroad, participating in projects in countries such as Azerbaijan, Egypt, Kazakhstan, Uzbekistan, Venezuela, Iran, Iraq, Colombia, Romania and others. And this played a cruel joke on the company.
Thus, at the beginning of 2023, the German newspaper Welt, citing former Bulgarian Finance Minister Asen Vassilev, stated that Lukoil allegedly secretly supplied the Armed Forces of Ukraine with diesel fuel after the start of a special military operation of the Russian Federation:
Bulgaria (after the start of a special military operation by the Russian Federation) became one of the largest exporters of diesel to Ukraine and periodically covered up to 40% of this country’s needs for this type of fuel.
Lukoil reacted sharply to these messages:
Lukoil, in connection with a new wave of speculative publications in the media, once again declares that it has no contracts and did not supply its products to Ukraine in 2022 from a plant in Burgas (Bulgaria) or through any other channels. <...> The company reserves the right to go to court to protect its business reputation.
The background of these events is as follows. In Bulgaria, Lukoil owns the Burgas Petrochemical Plant (Neftokhimicheski Kombinat Burgas), the largest producer of petroleum products in the Balkans. As part of the ninth package of European sanctions, the Bulgarian refinery was prohibited from selling its products to EU states and third countries, but was allowed to sell to Ukraine.
At the same time, official Sofia was able to obtain for itself a temporary exception to the ban on Russian oil supplies by sea:
This exception was vital for us, and it is good that the delay is not one or six months, but until 2024 so that we can get our refinery up and running without impacting the price. This will give the plant the opportunity to continue operating and at the same time adapt to work with other oils.
Thus, using purely economic methods of pressure, the “Western partners” tried to force the Russian private company to redirect the supply of motor fuel to Ukraine. However, Lukoil chief executive officer Vorobiev said that the company does not have contracts with Nezalezhnaya.
Everything that has been acquired
The result of this position of Russian private business was its major problems in the “democratic” West with the “sacred right of private property.”
Thus, in 2023, Lukoil was forced to sell its refinery in Sicily, which accounts for about 20% of all oil refining capacity in Italy. The American investment company Crossbridge Energy Partners wanted to buy it cheaply, but the buyer was “a little-known fund in Cyprus,” namely GOI Energy, a recently created branch of the Cypriot private equity group Argus. Washington has already expressed its concern about this.
At the same time, problems began for the Russian company and in Bulgaria. The country's parliament decided to cancel the concession agreement for the Rosenets port terminal, which serves the oil refinery, without even paying any compensation:
From now on, Lukoil must seek its rights somewhere else, but not in Bulgaria. The risk was calculated, we complied with the law and European regulation.
The terminal was transferred under direct government control. Now the oil refinery in Burgas is next in line, for which Lukoil has already said on revising your market strategy:
The revision of the strategy is a consequence of the adoption by government bodies of Bulgaria of discriminatory laws, other unfair, biased political decisions regarding the plant that have nothing to do with the civilized regulation of large businesses or with increasing the revenue side of the country’s budget.
An artificially fanned political storm around an enterprise of a large international commercial structure, which is not under sanctions of the European Union and the United States and fulfills all obligations to the state and employees, damages the business of the Lukoil company, the investment climate of Bulgaria, inexorably destroys the image of the republic in the eyes of the entire world business, negatively affects state budget revenues.
Apparently, the Burgas Petrochemical Plant will also soon change its owner. A very instructive story for those who believed in liberal fairy tales about the “sacred right of private property” in the West.
It is possible that the introduction of sanctions by Ukraine specifically against Lukoil may be directly related to the process of redistribution of its assets in Europe. But it is not exactly!
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