Italy wants to save a refinery owned by Lukoil in Sicily, including by asking the European Union for a temporary derogation. Indeed, Brussels is considering future sanctions against Russian oil.
A request for a waiver
In Italy, the ISAB refinery in Sicily, owned by the Russian company Lukoil, is of great importance to the country. The plant contributes to refining one fifth of Italian crude oil and employs 1,000 workers. In addition, the government has to deal with the anger of these employees who were demonstrating last week.
In order to avoid employment risks and a loss of refining capacity, Italy is considering a derogation for the Lukoil refinery. This derogation would only be temporary according to the Italian Minister of Industry, Adolfo Urso. However, this would buy the government time and keep the refinery afloat.
In addition to the request for a derogation, the Italian government is raising the possibility of a takeover of the refinery. However, talks for the sale drag on. In addition, the Italian Minister of Industry has raised the possibility of direct state support for the plant.
A possible buyout
Adolfo Urso refers to Germany. Berlin placed a refinery of the Russian company Rosneft under supervision in September. However, Italy is currently experiencing difficulties in finding banks willing to finance the ISAB buyout.
Banks are reluctant to deal with a Russian entity, although Lukoil is not subject to sanctions in Europe. To give confidence to the banks for this takeover project, Adolfo Urso assures that the SACE, a state agency, will offer guarantees. SACE would be willing to guarantee up to 90% of the funding.
Finally, Urso states that any potential buyer will have to comply with the conditions set to protect Italy’s interest. Otherwise, the Italian government may decide to block the takeover through the “golden power” mechanism. It allows blocking foreign takeovers of assets that the country considers strategic.
