Bulgaria Proposes Buying Russian Refinery as Hormuz Conflict Squeezes European Fuel

Brent crude hit $114 a barrel in early May, the highest since 2022, after conflict around the Strait of Hormuz choked roughly a fifth of global oil supply (CNBC, IEA). It has since settled near $106-108 on fragile US-Iran diplomacy (Euronews). For most of Europe, expensive oil is painful. For the handful of EU countries still tangled in Russian refinery ownership, it is exposing a deeper vulnerability: four years after the invasion of Ukraine, there is no common European plan for what to do with these assets.

The Bulgarian bet

Bulgaria's case is the starkest. The Lukoil refinery at Burgas, bought by the Russian company in 1999, covers roughly 80-90% of the country's fuel market (Novinite). When US sanctions hit Lukoil in late 2025, Bulgaria passed emergency legislation placing the refinery under a state-appointed manager (The Moscow Times). That manager, Rumen Spetsov, proposed on 17 May that the Bulgarian state buy the refinery outright, calling it a "historic opportunity."

The price tag is unknown, but the legal bill is already enormous. Lukoil's Swiss trading arm, Litasco, has filed an arbitration claim for roughly €3 billion against Bulgaria, arguing the state takeover amounts to expropriation (Dnes.bg). That claim follows Bulgaria regardless of who ends up owning the refinery. Meanwhile, petrol prices jumped 20% in two months, from €1.25 to €1.50 per litre (Sofia Globe). The Hormuz shock explains part of that, but a monopoly supplier facing zero domestic competition has little reason to absorb costs.

Four models, no coordination

Every EU member state with a Russian refinery has improvised its own exit. None followed the same template.

Italy completed the only full transfer. Its ISAB refinery at Priolo in Sicily, Europe's largest single-site refinery, passed from Lukoil to a Cypriot-registered fund (GOI Energy) in 2023, then to the Italian firm Ludoil in May 2026. Rome used its Golden Power law (which gives the government veto rights over deals in strategic sectors) to steer the process without formally nationalising. Switching from Russian Urals crude to 20 different supplier countries produced €333 million in losses in 2024, and Lukoil is still pursuing €150 million in damages through Italian courts.

Germany chose perpetual trusteeship. Rosneft's majority stake in the PCK Schwedt refinery, which supplies about 90% of Berlin's fuel, has been under federal control since 2022. In February 2026, Berlin shifted the legal basis to the Foreign Trade Act, making the arrangement indefinite. Economy Minister Katherina Reiche explicitly rejected nationalisation, arguing it would scare private investors from the energy sector. But when Russia cut Kazakh oil transit through the Druzhba pipeline on 1 May, Schwedt's capacity dropped to 80% — the threshold below which operations become unprofitable. Rosneft remains the formal owner, sitting in a legal limbo that suits nobody.

Romania took a lighter touch. Petrotel-Lukoil in Ploiești was placed under "extended state supervision" in February 2026, leaving ownership intact while the government controls operations. Romania simultaneously declared a fuel market crisis, capping commercial margins and cutting diesel excise by 30 bani per litre through June.

Hungary went the opposite direction. Russian oil dependence rose from 65% to 90% between 2022 and 2025. When the Druzhba pipeline was disrupted in January, Hungary burned through strategic reserves so fast that stockpile days fell from 91 to 44 in a single month. The new Magyar Péter government, which campaigned on cutting Russian ties, now targets 2035 for full diversification — eight years after the EU's own 2027 goal.

Who pays for the absence of a plan

EU sanctions define what member states cannot import, but ownership of the refineries themselves is treated as a national problem. The EU's 20th sanctions package in April 2026 targeted Russian energy revenues and the shadow fleet but created no mechanism for coordinated divestment. Each country bears the legal and financial risks alone, and Russia can retaliate country by country, as the Druzhba pipeline cutoff showed.

An oil crisis centred on the Strait of Hormuz, far from the Russia-Ukraine conflict that triggered divestment, may finally force Brussels to build a common framework. The ECFR has proposed using American sanctions as leverage for European decisions — a recommendation that says more about EU institutional capacity than its authors probably intended. Four years in, Europe's exit from Russian refining remains a collection of national improvisations, each with its own price tag. The Hormuz shock simply made those price tags harder to ignore.