UK Grants Temporary Sanctions Exemption for Lukoil's Bulgarian Operations

UK Issues Temporary Sanctions Waiver for Lukoil's Bulgarian Assets

The United Kingdom has granted a temporary exemption from its sanctions regime, allowing the continued operation of the Lukoil-owned Burgas refinery and its associated gas stations in Bulgaria. The exemption, issued by the UK Office of Financial Sanctions Implementation (OFSI) on November 14, 2025, will remain in effect until February 14, 2026.

This decision permits companies and banks to conduct transactions with Lukoil Neftochim Burgas AD, the refinery operator, and Lukoil Bulgaria EOOD, which manages the gas stations, along with their subsidiaries. The move comes after the UK, alongside the United States, imposed sanctions on Lukoil in October 2025, citing the Russian oil giant's role in financing Moscow's war in Ukraine.

Ensuring Bulgaria's Energy Security

The primary motivation behind the temporary waiver is to safeguard Bulgaria's energy security and avert potential fuel shortages. The Burgas refinery is a critical asset for Bulgaria, recognized as the largest industrial enterprise in the country and one of the biggest oil refineries in the Balkans. It boasts a processing capacity of 190,000 barrels per day (bpd) and is a significant contributor to Bulgaria's GDP and state budget.

Concerns had been raised that a full implementation of sanctions could lead to a fuel crisis, with Bulgaria's State Reserve Agency indicating that existing gasoline and diesel stocks might only last for a few weeks. The exemption aims to mitigate these risks by ensuring the uninterrupted supply of fuel to the Bulgarian market.

Bulgarian Government's Proactive Measures

In anticipation of the sanctions, the Bulgarian government had already taken steps to secure the refinery's operations. On November 7, 2025, the Bulgarian parliament approved legislation authorizing the government to take control of Lukoil's assets. Subsequently, Rumen Spetsov was nominated as a special administrator to oversee the refinery's management.

This proactive approach by Sofia, including the potential for state control and even sale of the refinery, underscores the strategic importance of the facility to the nation's economy and energy independence. The Bulgarian government has also implemented a punitive tax rate of 60% on the refinery's owner, designed to encourage a sale, with the rate dropping to 15% for a new owner.

Anticipated US Exemption and Broader Context

Following the UK's decision, the United States is also expected to issue a similar license for Lukoil's Bulgarian entities. Reports suggest the US exemption could extend until April 29, 2026. This coordinated effort highlights the complex balance European nations are attempting to strike between maintaining sanctions pressure on Russia and ensuring their own domestic energy stability.