Bulgaria Weighs Russian Refinery Buyout as Hormuz Conflict Squeezes European Fuel

Brent crude reached $114 a barrel in early May, its highest level since 2022, after fighting around the Strait of Hormuz disrupted roughly a fifth of global oil supply (CNBC, IEA). It has since eased to around $106-108, helped by fragile US-Iran diplomacy (Euronews).

For Malta, higher oil prices show up quickly in the cost base of an island that imports what it burns. For parts of mainland Europe, the pressure is sharper still. Several EU states remain tied to refineries owned by Russian groups, and four years after the invasion of Ukraine there is still no common European method for unwinding those assets.

The Bulgarian bet

Bulgaria is the clearest case. The Lukoil refinery at Burgas, bought by the Russian company in 1999, supplies about 80-90% of the country’s fuel market (Novinite). When US sanctions hit Lukoil in late 2025, Sofia passed emergency legislation putting the refinery under a state-appointed manager (The Moscow Times).

That manager, Rumen Spetsov, said on 17 May that the Bulgarian state should buy the refinery outright, calling it a "historic opportunity."

The purchase price is not yet known. The legal exposure already is. Lukoil’s Swiss trading arm, Litasco, has filed an arbitration claim of roughly €3 billion against Bulgaria, arguing that the state takeover amounts to expropriation (Dnes.bg). That claim follows Sofia whatever happens to the ownership.

Fuel users are paying too. Petrol prices rose 20% in two months, from €1.25 to €1.50 per litre (Sofia Globe). The Hormuz shock explains part of the increase. But when one supplier dominates the domestic market and faces no real local competition, it has little reason to carry the cost itself.

Four models, no coordination

Every EU country dealing with a Russian-owned refinery has invented its own exit route. No two cases have followed the same model.

Italy has completed the only full transfer. The ISAB refinery at Priolo in Sicily, Europe’s largest single-site refinery, moved from Lukoil to a Cypriot-registered fund, GOI Energy, in 2023. It then passed 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 guide the sale without formally nationalising the plant. The shift away from Russian Urals crude to supplies from 20 countries produced €333 million in losses in 2024. Lukoil is still pursuing €150 million in damages through the Italian courts.

Germany chose trusteeship without an end date. 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 moved the legal basis to the Foreign Trade Act, making the arrangement indefinite.

Economy Minister Katherina Reiche rejected nationalisation, arguing that it would frighten private investors away from the energy sector. But when Russia cut Kazakh oil transit through the Druzhba pipeline on 1 May, Schwedt’s capacity fell to 80%, the level below which operations become unprofitable. Rosneft remains the formal owner, leaving the refinery in a legal limbo that solves little.

Romania took a softer route. Petrotel-Lukoil in Ploiești was placed under "extended state supervision" in February 2026. Ownership stayed in place, but the government controls operations.

Bucharest also declared a fuel market crisis, capped commercial margins and cut diesel excise by 30 bani per litre until June.

Hungary moved in the other direction. Its dependence on Russian oil rose from 65% to 90% between 2022 and 2025. When the Druzhba pipeline was disrupted in January, Hungary used strategic reserves so quickly that stockpile days fell from 91 to 44 in one month.

The new Magyar Péter government, elected on a promise to reduce Russian ties, now aims for full diversification by 2035. That is eight years after the EU’s own 2027 target.

Who pays for the absence of a plan

EU sanctions say what member states cannot import. They do not say what governments should do with Russian-owned refineries sitting inside the single market. The EU’s 20th sanctions package in April 2026 targeted Russian energy revenues and the shadow fleet, but it created no common mechanism for divestment.

That leaves each country carrying the legal and financial risk alone. It also lets Moscow retaliate country by country, as the Druzhba cutoff showed.

A fuel shock that began around Hormuz, far from the Russia-Ukraine war that triggered Europe’s divestment problem, may now force Brussels to build the framework it avoided. The ECFR has proposed using American sanctions as leverage for European decisions. The fact that such leverage is needed says something uncomfortable about the EU’s own capacity.

Four years on, Europe’s exit from Russian refining is still a patchwork of national fixes, each with its own legal bill, political cost and fuel price. Hormuz has not created that weakness. It has made it harder to pretend it is manageable.