Italy to Ask EU Time to Save Lukoil-Owned ISAB Refinery

Italy has been considering options to save its Lukoil-owned ISAB refinery in Sicily, as the EU prepares to commence sanctions on Russian oil from Dec. 5. Italian government could ask the bloc for a temporary waiver for ISAB on upcoming sanctions, industry minister Urso said. Italy has been trying to keep the Sicily refinery operational in order to avoid job losses and a plunge in oil refining capacity. ISAB refines a fifth of Italy’s crude and employs about 1,000 workers, whose representatives met the government on Friday along with company executives, as workers demonstrated in Sicily.

Urso said Italy could ask the European Union “for an exemption, even temporary, to the embargo,” which would allow the government to buy time and keep the refinery afloat.

However, Urso underlined that the government’s primary goal was to secure deals with the banks to provide funds for the plant.

“We will discuss with banks whether they are open to finance ISAB if state agency SACE extends guarantees,” he added.

Banks have been reluctant to make a deal with a Russian entity, although neither Lukoil nor its Swiss subsidiary Litasco, which controls the refinery, are subject to EU sanctions.

Under current EU regulations SACE would be ready to guarantee up to 90% of the financing amount.

Urso said the government is also considering a direct state support for the plant. He referred to Germany’s takeover of a refinery owned by Rosneft in September.

Discussions to sell the ISAB plant have been dragging on.

Last month, Litasco rejected a bid from U.S. fund Crossbridge. Urso said any potential buyer would have to abide by conditions laid down to protect Italy’s national interest.

Such conditions would be established through the so-called golden power, a special mechanism the Italian government can use to block foreign takeovers of assets the country considers strategic.

Rome has also been pushing Litasco to provide oil and financing beyond the December deadline.

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