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Sofia court review of LUKOIL subsidiary claim to customs put off

September 28, 2011, 13:35 UTC+3

Lukoil forfeited its tax warehouse licences at the end of July 2011 for failing to meet a legal requirements to install fuel metering devices until June

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SOFIA, September 28 (Itar-Tass) — The Administrative Court of Sofia that on Wednesday was to consider a claim of Russia’s oil company Lukoil Bulgaria against the Customs Service of Bulgaria in connection with illegal revocation of its license for storage of fuel at the Neftochim Burgas refinery and blockage of the Rosenetz oil terminal, has postponed the proceedings until November 9. Bulgarian customs officers in July sealed the warehouses of the leading Russian oil producer in the country, accusing it of failure to install on time the special fuel metering devices for the calculation of excise duty payments. The previous meeting of the court was held on August 31 and then the hearing was postponed until the end of September.

The judges ordered a forensic-technical expert examination - to clarify whether the installation of metering and control devices was timely launched at the Neftochim Burgas plant and the Rosenetz terminal, and to establish the cost and duration of the work. However, the experts have not yet finished the examination and requested 45 more days to complete it.

The Bulgarian Customs Service had revoked the license of LUKOIL Bulgaria on July 22, due to the fact that the company failed to meet the requirements for installing product metering. The work of the refinery was suspended. The Supreme Administrative Court of Bulgaria on August 1 lifted the customs sanctions, finding them illegal, and allowed to continue production at the LUKOIL Bulgaria refinery pending the case consideration by the Administrative Court of Sofia.

Lukoil forfeited its tax warehouse licences at the end of July 2011 for failing to meet a legal requirements to install fuel metering devices until June. It practically meant that the refinery had to shut down. In the meantime LUKOIL appealed the licence revocation by the National Customs Agency (NCA). At the court hearing the NCA lawyer argued that LUKOIL started to mount metering devices only after the deadline expired and the customs authorities threatened sanctions. The LUKOIL lawyer said that the company started to install the required devices as stipulated by the law.

The court decided that an expert report would establish what was the case. The plaintiffs also argued that the investment for metering devices was too costly considering that it was based on faulty legislation and asked the court to send a question to the European Court about whether or not the applicable provision in the Excise Duty and Tax Warehouses Act (regulating the use of metering devices) is consistent with the European practice.

Bulgarian Prime Minister Boyko Borisov personally intervened in the conflict, and after negotiations with LUKOIL CEO Vagit Alekperov said that the Russian company will meet its obligations on the metering devices installation at the refinery by December.

LUKOIL Bulgaria EOOD is a commercial company of international renown with great economic and human potential. In 1999 it became part of the big LUKOIL family following the privatisation of LUKOIL Neftochim Burgas, the biggest refinery on the Balkans. The company is a leader in the sales and distribution of high-quality fuels, polymers and petrochemicals produced at the Lukoil Neftochim Burgas refinery, according to the company website. With its 200 stations, the LUKOIL filling station chain is the most dynamically developing one on the Bulgarian liquid fuel market.

LUKOIL NEFTOCHIM BURGAS AD is the biggest petrol refinery on the Balkans producing high-quality fuels, petrochemicals and polymers in conformity with the leading international standards. LUKOIL NEFTOCHIM BURGAS is a major supplier of liquid fuels, petrochemicals and polymers on the Bulgarian market. The refinery is among the leading suppliers of these products not only on the Balkans but also in Europe and the USA. On October 12th, 1999 LUKOIL acquired 58 percent of the shares in Neftochim at the price of USD 101 million in a privatisation transaction that earned the Transaction of the Year 1999 award from the Foreign Investments Agency in early 2000. Significant investments in the overall renovation and modernization of the facilities coupled with the introduction of modern management systems have turned LUKOIL NEFTOCHIM BURGAS into a sophisticated refinery.

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