Bulgarian Oil and Gas Association head: ‘Nothing can save the situation’

Nothing can save the situation, Bulgarian Oil and Gas Association board chairperson Svetoslav Benchev told Bulgarian National Television on March 9, commenting on the Middle East crisis pushing up global oil and gas prices.

“Oil is $116 per barrel. Iran will also start hitting oil infrastructure, which practically terrifies the market. We see that the Americans have already hit an Iranian one,” Benchev said.

He said that the period for market recovery and normalisation of prices would not last several months.

“Qatar, for example, said that it will take them between two weeks and two months to resume what they had before the conflict in the Middle East began,” Benchev said.

“The situation in Iraq and Kuwait is a little different, because there is still no infrastructure that has been hit there, unlike Qatar,” he said.

“And it will depend on how quickly the Strait of Hormuz can be unblocked, how quickly the tankers will pass and how quickly they will be able to overcome this problem with the lack of quantity and tankers, especially.

“But I guess that we will again take somewhere between three weeks and a month for things to normalize and return to something we have seen.”

Benchev said that Europe imports about 56-60 per cent of its natural gas from the US and is practically unprepared for what happened, which is why he expects the greatest losses to be borne by European countries.

He said that “unfortunately, we always pay the price for what’s happening in the world.”

Benchev said that storage facilities in Europe are below the critical minimum – around 33 – 37 per cent, and that an increase in fuel prices is expected.

“If this trend persists with these prices of $115-116 [a barrel], there will probably be an increase in the price of fuels in the coming days,” he said.

“We are not isolated islands on world markets. The situation is quite extraordinary. So far, we have never had situations in which the flow is closed, in which a lack of finished products begins to be felt on international markets.

“You may have noticed, but the increase in the price of diesel is higher than that of petrol and this is completely normal, because this is the fuel that is sought after so that goods can be transported. We are truly in a quite extraordinary situation.”

The fuelo.net website showed that on February 27, a litre of diesel cost an average 1.29 euro in Bulgaria, rising to 1.43 euro as of March 9. On February 27, a litre of petrol cost an average 1.25 euro, and as of March 9, costs 1.33 euro.

Vlaladimir Ivanov, head of the State Commission on Commodity Exchanges and Markets and Chairman of the Coordination Centre of the Euro Mechanism, asked by reporters on March 9 about fuel prices in Bulgaria, said that the prices were subject to monitoring.

“What we are observing is between five and 15 euro cents [price increase] at fuel stations, but let’s wait for the processes, it’s still too early to talk,” Ivanov said, expressing hope that the crisis will be resolved soon.

On March 8, caretaker Finance Minister Georgi Klisurski told Bulgarian National Radio that at the moment there are no risks of interruption of fuel supplies to Bulgaria.

“For March, we expect many tankers to deliver crude oil to Lukoil Neftochim Bourgas,” Klisurski said.

“The good thing is that the majority of the crude oil that Bulgaria imports is under a long-term contract with Azerbaijan, in which prices are fixed,” he said.

The Competition Protection Commission, the Consumer Protection Commission and the National Revenue Agency will be on the ground and will carry out inspections so that there are no speculative increases, Klisurski said.

A notice of Parliament’s website said that Speaker Raya Nazaryan was convening a special sitting of the National Assembly on March 10 at 1pm.

The sole item on the Order Paper is a hearing of Klisurski, Customs Agency director Georgi Dimov, the head of State Reserve and Wartime Stocks State Agency Assen Assenov and Lukoil Neftochim Bourgas special manager Roumen Spetsov “on the state’s readiness to provide the necessary quantities of fuel for the needs of the population and industry in connection with the crisis caused by the blockade of the Strait of Hormuz, as well as on the measures that the government envisages to deal with the price shock caused by this crisis”.

(Photo: Kiril Havezov/ sxc.hu)