The oil industry is seriously worried about the future and investments in the sector, the European requirements seem overwhelming at the moment

The state does not care about what is happening, and the lack of adequate solutions and position can lead to the collapse of the sector

Energy / Bulgaria
3E news
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Source: Georgi Velev / 3eNews

George Velev

The oil companies in our country have serious concerns about the development of the market due to the lack of policy for the sector and reduced investments. According to the business, it is important to have a single body responsible for, monitor and support the development of the sector, and not several ministries and agencies to follow only the letter of the law. All this will create more and more problems in the future, and politicians should stop looking only for populism through promises of how "fuel prices will continue to decrease". European regulations and ideas for charging stations are also causing concern among oil entrepreneurs. This is the general message that was heard by experts from the oil and gas sector during a round table on the topic "Current problems of Bulgaria's energy security", organized by the online platform 3eNews and energy policy expert Slavcho Neikov.

Currently, according to European directives, a charging station for electric cars with a capacity of 300 kW is expected to be built every 100 km on Bulgarian roads. We currently have difficulties to supply the objects with much smaller power (about 50 kW) sometimes. And at the moment it is not at all clear how these charging stations will be connected to the energy grid and who will build these capacities. This was explained by Svetoslav Benchev, Chief Legal Officer of the Bulgarian Oil and Gas Association.

We do not have a responsible minister or ministry that works with our industry. And this is a serious problem, because an industry like ours needs stability, especially in such a difficult moment as the current one, the expert added.

In terms of European legislation, the most important for the sector is the “Fit for 55” package. And there are included several bills, directives and regulations that will lay the foundation for the development of the sector in the coming years. There are tax changes and the introduction of an emissions trading scheme, all of which will create new challenges for the sector. Because these requirements will lead to higher prices for consumers. "And when the price for consumers rises, the price for transporting goods and services also rises, and this does not lead to good things, purely economically," explained Benchev.

The change in the tax base of energy products, which will now be charged on the basis of "energy volume", and this will also increase prices. Regarding the prices for the emissions after 2027, prices will also be paid for the quotas, and they are currently in the range of 90 – 100 euros/t. Energy efficiency requirements at oil sites are also an issue. All this leads to an increase in prices, the lawyer is categorical.

In the case of European directives, the requirement of the directive for the use of RES in transport and the increase of renewable fuels is also important. It now has a change to increase the share of RES in transport. So far there was 10% RES and now we are moving to 13% carbon reduction. This is a 26% increase in RES in transport. We have 7.49% implementation for last year, explained Benchev. BPGA wonders how these values will be achieved - there are currently 3,000 electric cars in Bulgaria, and the figure does not include hybrid models. And the goal is to have 1 million electric cars.

Politics regarding Ukraine is also an extremely important factor. The moment with the regulations on the sanctions against Russia is important there. The derogation given to us under it was not used, and all of us here in Bulgaria made amends with each other. "We made problems for ourselves, what did we achieve? Nothing. And despite this regulation, oil continues. And that's a good thing. Because without it, not only Bulgaria, but also the Balkan Peninsula remains without petroleum products," Benchev explained.

Despite geopolitical changes and sanctions, Morocco and Tunisia currently export many times more oil products to the EU. And Turkey does not have an embargo on Russian oil and processes and exports production, BPGA reminded.

A problem with oil reserves

We must follow not only the European requirements, but also seek our national interest. And it is related to Bulgaria being provided with petroleum products in the next decade.

Currently, half of the required oil reserves can be stored in another EU member state. In case of crisis, they may be requested and delivered to us. In Bulgaria, however, there are companies that practically have almost no stocks or do not keep them in stock for at least 90 days, it became clear from the oil experts. According to Benchev, the delivery of these fuels stored outside Bulgaria will also be a problem. Especially if an oil crisis overtakes us, which covers not only our country, but also other EU countries.

At the same time, the deputies of the last National Assembly mainly dealt with the issue related to the management of "Lukoil" and the supply of non-Russian oil. "There were three bills on the subject in the National Assembly - one was for banning the export of Russian oil, the second was for taxation of oil products, and the third was for the appointment of a special commercial representative in the management of Lukoil."

Separately, there were several tax changes that were not well coordinated. And the state ordered the Minister of Economy to find a formula and calculate the price differences between Brent and Urals oil, because there is no clear quotation for the Russian oil.

At the same time, the EC stated that the discount of 25 cents contradicts the legislation and is absolutely discriminatory. And now we have to see how people will support each other at this time. But for that we need to know who the energy poor are. Such a definition has not yet been made either. In our legislation, there is no definition of how already imported Russian products are taxed, Benchev added.

With regard to the special commercial representative, there are again a number of problematic issues. “What do we want to achieve with this idea? This looks like hidden nationalization. The state wants to manage a company, but without suffering the damage from it. That is, the costs are for the private company, and the benefits are for the state," Benchev analyzed. He asked whether the state is capable of dealing with a real crisis in fuel supplies in our country. Even through the definition of "critical infrastructure", the state can decide to take over the management of every single company through whose territory such objects pass, Benchev added.

In short, there are a number of problems and questions that the state must answer. It is also necessary to create a transport strategy for how the sector will move in the next 10-15 years, but this is not being done at the moment.

"The market is really not in a good state," added Zivodar Terziev, chairman of BPGA. And this is due to the fact that it is used until now as a kind of "punching pear", and the goal of the state is only to reduce the price of fuels. According to him, the Bulgarian industry for fuels and petroleum products has had almost zero investments in recent years. And internal combustion engines will be widely used for at least another 15 years.

However, the lack of investments in our country and mutual accusations will lead to a collapse, Terziev was categorical.

According to him, the energy security and security of the state should not be risked. Because there may come a time when even the people's representatives will go to work with wheels.



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