A year like no other, unlikely ever to be repeated - that's how 2022 can be summarized for the fuel market. It brought billions in revenue and immense profits to international giants and local wholesalers alike, as well as profound and long-lasting changes to the oil business that will stay for a long time, such as the upcoming break with Russian oil.
The upheaval began with Russia's invasion of Ukraine. For Bulgarian traders, it became an opportunity for huge exports to Ukraine, and many local companies took advantage. National statistics data for 2022 showed fuel exports of a record BGN 1.7 billion, with over 80% of these, or BGN 1.4 billion, in diesel exports. In terms of volume, this was 737,000 tonnes of fuel, of which 83%, or 615,000 tonnes diesel.
The 30 largest companies in the sector reported an 82% increase in total revenues on a year-on-year basis, rising from BGN 17.7 billion to BGN 32.4 billion. Much of the increase in turnover was due to sales in the Ukrainian market, but also to the high price of oil products last year. Total profit, on the other hand, rose at a much more modest pace, to BGN 607 million, from BGN 554 million in 2021.
Diesel exports from Bulgaria to Ukraine became the main topic in the sector domestically last year, even attracting the attention of international media. At the start, there was a sound market logic to it: after Russia's invasion of Ukrainian territory, there was a huge demand for fuel, and as there is a shortage of diesel in neighboring Romania, many Ukrainian players turned to Bulgarian traders, causing long queues at the Ruse-Giurgiu bridge over the Danube.
The Ukrainian market also provided an opportunity for good profits due to the price advantage of the products made by Bulgaria's sole oil refinery, Lukoil Neftochim Burgas. Meanwhile, after the imposition of EU sanctions on Russia, the price of Russian crude oil collapsed. This led to the Burgas refinery switching to 100% Russian oil and a price advantage for the production sold by the trader Lukoil Bulgaria.
The pricing policy of the Russia's Lukoil in Bulgaria and slightly lower wholesale prices compared to neighboring markets made the local market unattractive in terms of margins. Thus, traders became even more strongly export-oriented. The country was given a two-year derogation on Russian seaborne oil imports to eliminate its dependency. What is more, Bulgaria benefited from another loophole left by Brussels, which allowed it to continue exporting diesel to Ukraine even after the EU completely closed its doors to Russian fuels on 5 February 2023.
However, 2022 is unlikely to repeat itself, as exports to Ukraine came to an abrupt halt in February 2023 and in the months that followed they were in smaller volumes.
Big in Ukraine
In 2022, exports were carried out by about a dozen Bulgarian companies - warehousekeepers and exporters who bought fuel on the local market from the wholesaler Lukoil Bulgaria. The company's revenues grew by 128% year-on-year to BGN 7.3 billion, which includes retail sales at Bulgarian petrol stations. The company reported an unprecedented profit of nearly BGN 150 million.
In third place is Lukoil Neftochim Burgas. The refinery saw its revenue grow 89% to BGN 2.1 billion in 2022 and reported a profit of nearly BGN 130 million. The future of the Russian oil giant in Bulgaria is uncertain, as the derogation that benefited it was dropped early and there are significant pressures for it to sell its business.
Other big exporters were Ruse-based Bulmarket DM, which grew by 166% in turnover; Saksa, which raised sales by 32% and ranked number 3 with BGN 2.6 billion in turnover, Stara Zagora's Zara-E, whose revenues increased by 68%, and Petrol (58% growth).
One of the companies that strongly expanded their activities last year thanks to the strong demand for fuels from Ukraine, is G&T Petroleum. Revenues of the trader based in the town of Byala, near Ruse grew from BGN 69 million to BGN 311 million.
A player that stood out by organizing both their imports and exports independently was Georgi Samuilov's Insa Oil, which has bases in Belozem, near Burgas, and in Ruse. The company grew revenues by 109% to BGN 1.9 billion in 2022, which ranks it fifth.
Who is number one
The leader in the ranking of the largest in the fuel sector for the second consecutive year is the biodiesel producer Astra Bioplant. The company has revenues of nearly BGN 7.7 billion for 2022. This is an increase of 130% for the company from Slivo Pole near Ruse. Biodiesel sales increased from 1.0 million tonnes in 2021 to nearly 1.8 million tonnes in 2022. The main market for biodiesel is neighboring countries, with almost no sales in Bulgaria. For crude oils, the jump was more than two and a half times - from 102,000 tonnes to 282,000 tonnes. Fresh oils traditionally find a market abroad. And the price increase was 27%. For 2022, Astra Bioplant's profit was BGN 124 million, while a year earlier it was BGN 227 million.Astra Bioplant is in the same group with another large company in the fuel sector - Bulmarket DM, which has revenues of BGN 1.1 billion in 2022, up 166% year-on-year. The fuel trader is in the group of local companies that have responded to the high demand for fuels from Ukraine and has a good logistics advantage.
The year of big money
It has been a more than successful year for the big international Western companies which achieved record profits. Shell reported a record profit of nearly USD 40 billion for 2022, more than double the previous year and the highest in more than a century since the company went public. On Bulgarian soil, Shell reported a rise in revenue of 51%. Earlier this year it was revealed that Shell Bulgaria is expanding its network by leasing five Emko-M stations in Plovdiv.
OMV Bulgaria saw its revenue rise 36%. In neighboring Romania, OMV Petrom said it had discovered new oil and gas reserves equivalent to about three-quarters of its total production in 2022 there. The Romanian company was the country's record-breaker last year, posting a net profit of more than 2 billion euro on revenues of 11 billion euro.
Eco Bulgaria, a subsidiary of Greece's Hellenic Petroleum, increased its revenue by 38%. Last year Hellenic Petroleum unveiled a new logo and name, HelleniQ Energy, and transformation plans focused on renewable energy investment and reducing its environmental footprint.
A year like no other, unlikely ever to be repeated - that's how 2022 can be summarized for the fuel market. It brought billions in revenue and immense profits to international giants and local wholesalers alike, as well as profound and long-lasting changes to the oil business that will stay for a long time, such as the upcoming break with Russian oil.
The upheaval began with Russia's invasion of Ukraine. For Bulgarian traders, it became an opportunity for huge exports to Ukraine, and many local companies took advantage. National statistics data for 2022 showed fuel exports of a record BGN 1.7 billion, with over 80% of these, or BGN 1.4 billion, in diesel exports. In terms of volume, this was 737,000 tonnes of fuel, of which 83%, or 615,000 tonnes diesel.
