The fuel market is expected to reach 1.7 million tonnes this year, Emil Kostourkov, Deputy Sales Director at LUKoil Bulgaria, said at Tuesday's seminar in Sunny Beach devoted to the production and sale of oil products, BTA is reporting.

The Bulgarian fuel market totaled 1.38 million tonnes in 2006 and 1.48 million tonnes in 2007. The problem is that no excise duty is paid on about 30 per cent of these fuels, Kostourkov said. A few years ago, the grey sector topped 50 per cent. Although fuel sales are growing, LUKoil Bulgaria has noticed that petrol stations sell less, both because there are more of them and because of the grey sector.

There are 2,300 petrol stations held by relatively small owners, which report a mere 30 per cent market share. As to the large retail chains, Petrol has 383 filling stations, LUKoil Bulgaria has 184, Shell 84 and OMV 23. Their market shares are as follows: LUKoil Bulgaria 20 per cent, OMV and Shell 17 per cent each, and Petrol 16 per cent, Kostourkov said.

Fuel prices in Bulgaria are held down by stiff competition from nine oil refineries, all located within 700 km of Bulgaria, he said. The price of diesel oil is high because it is more in demand than petrol, and any given amount of oil yields three times more petrol than diesel oil. The latter accounts for 43.8 per cent of the Bulgarian fuel market, A95 petrol is next with 31.7 per cent, liquefied petroleum gas 17.2 per cent, A98 petrol 4 per cent and falling, and methane gas 3.3 per cent.

Retail fuel prices have gone up about 20 per cent so far this year, Kostourkov said, declining to forecast the annual increase.

The current price of fuels is breaking the back of the economy, LUKoil Bulgaria Director General Valentin Zlatev told journalists. He explained that excise duty at 24 per cent and VAT at 20 per cent are among the high rates in the EU, while incomes in Bulgaria rank among the lowest, and per capita GDP is three times lower than the EU average. While a German works an hour to buy 5 liters of petrol in Germany and 7 liters in Bulgaria, a Bulgarian buys one liter of petrol with an hour's pay, Zlatev said. While he ruled out forecasting the oil price, he said 145-150 dollars per barrel seemed a reasonable price.