Oil and gas
BMI has said that the Bulgarian business environment remains challenging and is suffering from high levels of corruption and inefficiency. The oil sector in the country is uninspiring, according to BMI, and there is limited new activity along with a continued decline in domestic production. The upside in the oil and gas sector comes from the US$1.5 billion investment to upgrade the Neftochim refinery which will add 50 000 bpd of distillation unit capacity. The natural gas sector is looking positive in general as new gas projects are being brought online both on and offshore.
Lower global oil prices will offer an indirect stimulus to the Bulgarian economy by reducing fuel prices, BMI has opined. The company has also said that the progress being made on improving cross border gas infrastructure trade flexibility is continuing as the development of interconnections between Bulgaria and Romania, Serbia, Greece and Turkey have hit different stages of completion.
According to BMI, the Bulgarian petrochemicals industry is recovering but remains vulnerable to supply side shocks in the form of gas feedstock restrictions and high oil prices as well as sluggish external demand. The sector did enjoy an output surge last year as the economy began to recover in earnest. Also last year, capacities in the country remained unchanged with olefins capacities of 300 000 tpy ethylene, 80 000 tpy propylene and 50 000 tpy butadiene. This relatively small feed, BMI reports, is aimed at polymer plants that are insufficient to cover domestic needs. Also, amid a surge of cheap gas based production in the US and Middle East, Bulgaria is struggling with declining profitability in the petrochemicals sector.
When it comes to domestic consumption, Bulgaria is set to see a thriving market for rubber and plastics for the automotive industry, which has recently seen the opening of a modest Chinese car plant and the prospect of further additions. However, much of the growth has already been achieved and the plant is now operating at full capacity.
Adapted from report briefs by Claira Lloyd