Italy To Place Lukoil Refinery Under Trusteeship As Russian Oil Ban Looms

Days before the EU embargo on imports of Russian crude oil by sea kicks in, Italy’s government is set to announce on Thursday a temporary solution to keep a Lukoil-owned refinery in Sicily operational by putting it under trusteeship, the president of the Sicily region, Renato Schifani, said.

“Today the government will announce a temporary decision of a trusteeship to avoid idling of activity and the potential job losses catastrophe,” Schifani was quoted by Italian media as saying on Thursday. 

Lukoil, Russia’s second largest oil producer and a major refiner, owns the ISAB refinery in Priolo, near Syracuse. The refinery risks closure after the EU embargo on Russian crude oil imports begins on December 5. 

The temporary solution is an important decision which will eventually allow the sale of the facility. However, if there are no possible buyers, Italy cannot rule out a nationalization of the refinery, as it happened with similar assets of Russian oil firms in Germany, Schifani said.  

The ISAB refinery accounts for around a fifth of Italy’s crude processing volumes and employs about 1,000 people. 

Earlier this week, Italian daily La Repubblica reported that the government’s meeting today would consider nationalizing the Lukoil-owned refinery. The government has failed to obtain a derogation from the EU for using Russian crude oil, and it is now working on the details of how the Italian Treasury could end up owning the asset. 

Crossbridge Energy Partners, a U.S.-based private equity group, has resumed talks to buy the refinery from Lukoil, sources briefed on the issue told the Financial Times this week. Any deal, if it is reached, will need the approval of the Italian government, the sources said. 

A potential agreement could value the refinery at between $1.05 billion (1 billion euros) and $1.57 billion (1.5 billion euros), they told FT. 

By Charles Kennedy for Oilprice.com

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