Home Energy assets European capitals mull seizing Russian-linked energy assets – EURACTIV.com

European capitals mull seizing Russian-linked energy assets – EURACTIV.com

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From Sofia to Berlin, governments are planning to expropriate, nationalize and seize energy infrastructure owned by Russian-linked companies.

Bulgaria is launching a political debate on the possible expropriation of strategic assets held by Russian companies.

Pro-European Democratic Bulgaria, part of the ruling coalition, has called on the government to prepare for a possible takeover of various assets of Lukoil Bulgaria.

The company’s Neftohim refinery in the Black Sea port city of Burgas, the largest in the Balkans, supplies around 60-70% of the fuels for the Bulgarian market. The refinery is owned by Lukoil through the Swiss company Litasco, owned by a Russian parent company.

Friday, May 13, the co-leader of the Bulgarian Democratic Party, Hristo Ivanov, called for the “supplementation” of political and economic life in Bulgaria.

Democratic Bulgaria wants the introduction of a legal possibility to take control of strategic sites currently controlled by individuals associated with the Russian Federation or the Putin regime.

“For decades, the Kremlin has pursued its goals in the region through a wide range of instruments of intimidation and demoralization, propaganda of public opinion, economic dependence, erosion of institutions and corruption of the ruling elite. Bulgaria is among the countries most affected by this type of hybrid penetration in the region,” says the statement read by Ivanov.

Martin Vladimirov, an energy expert at the Center for the Study of Democracy, said that if the refinery’s management does not adopt a new strategic vision for oil supply, a new legislative framework may be needed to allow its nationalization. . “In this case, such a measure is justified, because Bulgaria’s national security is affected,” Vladimirov said.

Lukoil is also expected to encounter difficulties in Italy, where media reports in April suggested the state might nationalize its ISAB refinery.

In the event of an EU oil embargo, Italy could consider the temporary expropriation of the ISAB/Lukoil refinery in Sicily as an option, sources confirmed to EURACTIV Italy on Monday. While Italy’s refining capacity is very limited, ISAB covers around 23% of global capacity with an annual production of 16 million tonnes.

Italy’s Lukoil refinery – which employs around 8,000 people in Sicily, where employment rates are among the lowest in Europe – currently buys 30-40% of its crude oil from Russia. An oil ban would therefore likely lead to ISAB shutting down production and relocating, leading to severe job losses and a potentially devastating impact on the local economy.

Meanwhile, in Germany, the government hopes to enact a law that will allow the expropriation of critical infrastructure, EURACTIV Germany reports.

“These changes [to the 1975 energy security act] give us the opportunity to put critical infrastructure under – yes – guardianship or, as a last resort, expropriation,” State Secretary for Economics and Climate Michael Kellner told the German parliament on Thursday (May 12).

“We should surely learn a lesson from this crisis: that we never again hand over critical infrastructure into the hands of Russia or into the hands of states that look like Russia. It was a mistake, after all,” he added.

Expropriation and reconstruction

Meanwhile, on May 9, members of the European Parliament spoke out in favor of using seized Russian assets to arm and rebuild Ukraine.

With estimates of the value of seized Russian funds and assets reaching some $300 billion, 80 MPs said they should be reallocated to help fund the daunting task of rebuilding Ukraine’s towns and villages that have been destroyed due to the invasion of Moscow.

A letter calling for action has been sent to EU foreign policy chief Josep Borrell asking “the European Commission to present an urgent legislative proposal providing a clear framework to redeploy Putin’s treasury to protect and rebuild Ukraine”. It should also coordinate with international partners to set up a reconstruction and defense fund with Russia’s frozen international reserves, the letter continued.

On May 5, European Council President Charles Michel also came out in favor of reallocating Russian billions in the same way.

“Personally, I am absolutely convinced that it is extremely important not only to freeze the assets but also to allow them to be confiscated, to be made available for the reconstruction of the country (Ukraine)”, declared Michel, president of the European Council. the Interfax-Ukraine news agency.

Although Berlin, Rome and Sofia have not mentioned repurposing in their efforts to expropriate, nationalize, seize and freeze, questions remain about what will happen to these assets in the medium and long term.