In Bulgaria, there is already a shortage of propane-butane, and with the shutdown of “Neftohim” – also of diesel
Fuel traders in Bulgaria report double increases in their financial results against the background of one of the most difficult years for the industry due to the energy crisis caused by the disrupted distribution and loss of processing capacities due to the war in Ukraine. The great volatility of prices for cooperation in securing financing and insuring traders, and the Bulgarian market went from an oligo leader to an almost monopoly. The great difficulties and challenges for traders are yet to come, he said Svetozar Dimov, managing partner in “Saksa”, on the air of the program “Business Start” with leader Hristo Nikolov.
Due to the recovery of the economy after the pandemic and government financial support, consumers have a reserve of liquidity that is used in the situation of increased prices, which explains the lack of suppression of consumption. The difference in the prices of propane-butane and methane and diesel categorically redirects consumption in Bulgaria, commented Dimov.
“Data from NSI for November show an increase in propane-butane consumption towards November 2021 by more than 10 million liters. This is the decrease in the sales of the products for which Bulgaria has its own and sufficient production – propane-butane is the only energy product whose production in Bulgaria is significantly less than consumption.”
The refinery of “Lukoil” in Burgas produces 10-11 thousand tons of propane-butane per month, and the consumption reaches 45 thousand tons. The necessary quantities are mainly imported from Kazakhstan, Russia and Turkey, said Dimov.
“The shortage of propane-butane is a fact – every two or three days it happens that there are no products for two or three days at some of the gas stations. The problems are not so much with securing the supply as with the logistics system.”
BMF Port Burgas is the only port where propane-butane tankers can be unloaded, but it does not have sufficient storage capacity and direct transportation by tankers in railway tanks is required, said Dimov. Processing a small tanker, about 2-3 thousand tons, takes three to four days, so the optimal loading of the port is about 20 thousand tons. There are imports by rail tankers from Romania, but these contracts expire at the end of 2022, warned Dimov.
“Bulgaria faces serious challenges to secure the required amount of LPG for a target year.”
One possibility is to deliver quantities to a terminal in Varna, but it does not yet have a positive environmental impact assessment.
Fuel consumption in the country until September 2022 follows GDP growth, Dimov said. The growth in gasoline consumption for the same period of 2021 was 13 thousand tons, or 3.39%, reaching 396 thousand tons; for diesel, the increase was 94 thousand tons, or 5.28%, reaching 1.873 million tons; the growth in propane-butane was 9 thousand tons, or 2.9% to 320 thousand tons.
The introduction of a price ceiling for Russian oil calmed the international markets and all consumers are now sure that there will be no deficit at the global level and Russia will continue to export, commented Dimov. The measure worked and there was a sharp decline in Brent and Urals quotes.
“Unfortunately, energy sources and fuels are more and more transformed into politics due to the specifics of the conflict in Ukraine – that the country in it is one of the three largest oil producers.”
The tying of insurance for Russian oil tankers has led to air traffic jams on the Bosphorus and Dardanelles, where transit times reached 12 days, although they are now down to 8 days. Turkey is beginning to require additional assurances from insurers that policies will work and that friends are not violating international sanctions, which takes time to gather information from all consumers, Dimov says.
“This once again shows Turkey’s growing role as an energy hub in a global computer.”
Bulgaria is not ready to provide the necessary quantities of diesel fuel for the domestic market if the Lukoil refinery is temporarily shut down. While there are opportunities and infrastructure to supply gasoline and LPG from the country, there is not enough capacity to import diesel from neighboring countries, which are supported by production, Dimov said.
“Conditionally, the average monthly consumption of diesel fuel is 210 thousand tons – at the moment, the only large port where tankers can be unloaded, outside of the Lukoil group, is the oil port in the Varna terminal, which can process around 40 50 thousand tons of shipping by sea.”
About 10-12 thousand tons of diesel enters monthly via the Danube from Romania via Ruse, and the railway infrastructure does not allow imports except from Serbia, from where minimal quantities enter.
“With the countries where there is a surplus – Greece and Turkey – we do not have a built railway infrastructure… Deliveries from Greece are carried out by tanker trucks, which make logistics more expensive and limit the amount of deliveries to about 20 thousand tons. Bulgaria can provide itself with 100 thousand. tons of diesel without using Lukoil’s infrastructure.
Even to expand the capacity of unloading ports, shippers will face a shortage of tankers and locomotives on the domestic railway network, Dimov added.
You can watch how fuel retailers are preparing for the green transition and what the future of electric cars in Bulgaria is in the video.
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