Geopolitical Report ISSN 2785-2598 Volume 50 Issue 6
SpecialEurasia OSINT Unit

Executive Summary

Kazakhstan’s state-owned KazMunayGas (KMG) is seeking to acquire the Russian-owned LUKOIL Neftochim Burgas refinery in Bulgaria for $1 billion. This acquisition, if successful, will significantly bolster Kazakhstan’s influence in European energy markets and reduce Bulgaria’s reliance on Russian oil supplies.

Bulgaria’s energy sector remains vulnerable because of limited domestic production and historical dependence on Russian imports, despite diversification efforts. Sofia’s energy diversification policies might face a risk because of the resurgence of pro-Russian sentiment and the coalition government’s inclusion of the pro-Russia BSP.

This report examines how Kazakhstan’s strategic move in Bulgaria’s energy market affects the regional geopolitical balance, considering Russia’s local influence and political developments.

Background Information

KazMunayGas (KMG) has positioned itself as a key supplier of crude oil to European refiners, filling gaps left by disrupted Russian energy flows post-Ukraine conflict. The company supplies approximately 80% of crude oil via the Caspian Pipeline Consortium. Following its acquisition of Romania’s Rompetrol refinery, KMG’s planned purchase of the Burgas refinery would double its European refining capacity, further consolidating its presence in the EU energy market.

Bulgaria historically relied on Russian natural gas and oil supplies; a dependency exacerbated by insufficient domestic production. The Ukraine conflict forced Bulgaria to diversify energy sources through interconnectors with Greece and Romania and explore liquefied natural gas (LNG) imports. However, domestic energy security remains precarious, with significant resistance to transition away from Russian oil refining and coal-fired power plants.

Russia has maintained strong political, cultural, and economic influence in Bulgaria, historically leveraging shared Orthodox Christian heritage and pro-Russian sentiments. Politically, the Bulgarian Socialist Party’s opposition to military aid for Ukraine and scepticism towards EU-led decarbonisation underscores enduring ties with Moscow.

Bulgaria: Current Situation

KazMunayGas is negotiating with LITASCO SA and Vitol Group to secure financing for the Burgas refinery acquisition. Bulgaria’s planned 2025 restrictions on refining Russian oil create favourable conditions for KMG’s expansion. Hungary’s MOL Group also expressed interest, showing regional competition for the strategic asset.

Bulgaria’s natural gas sector remains heavily dependent on imports, despite diversification. While current LNG infrastructure and interconnector systems mitigate certain risks, increasing energy costs and political resistance hamper the rapid implementation of transitions. Methane leaks and emissions reductions also challenge Bulgaria’s commitments under EU climate goals.

Looking at the country’s domestic politics, the prospective coalition between Citizens for European Development of Bulgaria (GERB), BSP, and the party “There Is Such a People” (ITN) introduces potential policy conflicts. The BSP’s control of energy-related portfolios could delay decarbonisation and reinforce reliance on traditional energy sources, conflicting with EU policies. Bulgaria’s support for Russia and past refusal to help Ukraine militarily could weaken its relationship with NATO and the European Union.

Implications and Forecast

• Energy Market Impacts. KazMunayGas’s acquisition of the Burgas refinery would enhance Kazakhstan’s leverage in European energy markets, while reducing Russian influence in Bulgaria. This development aligns with the EU objectives of energy diversification but risks intensifying competition between Kazakhstan and regional actors like Hungary.
• Geopolitical Ramifications. Astana’s strengthened position in Europe could heighten tensions with Moscow, particularly as the Burgas refinery is a strategic asset. Concurrently, Bulgarian political instability and pro-Russian sentiments could jeopardise the implementation of EU-aligned energy and climate policies.

Key Risk Indicators

1. Escalation of pro-Russian political rhetoric in Bulgaria.
2. Delays or reversals in Bulgaria’s energy diversification projects under BSP influence.
3. Resistance from Russia to KazMunayGas’s acquisition, potentially through economic or covert means.

Risk Scenarios

1. KazMunayGas completes the acquisition of the Burgas refinery without significant interference. This operation may facilitate substantial progress in Sofia’s energy diversification efforts, ensuring alignment with European Union energy policy. This diminishes the country’s reliance on Russian oil imports, enhances Astana’s role within the European energy market, and establishes the Burgas refinery as a critical element of regional energy security.
2. Negotiations face prolonged delays, resulting in a state of uncertainty that affects Bulgaria’s energy policy and strategy. This situation complicates the country’s efforts to align with EU standards on energy independence and emissions reduction. The delayed resolution could impact investor confidence in the region and lead to reduced momentum for energy transition projects.
3. Political instability and Russian interference prevent KazMunayGas from acquiring the Burgas refinery, perpetuating Bulgaria’s energy vulnerabilities. Sofia might lose the opportunity to reduce its reliance on Moscow’s energy supply. This outcome might exacerbate Bulgaria’s reliance on conventional energy imports, undermining its standing within the Brussels’ energy and geopolitical spheres.

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