10 Apr 2023 14:58

Italian govt needs more time to review sale of Sicilian oil refinery

MOSCOW. April 10 (Interfax) - Italian authorities intend to investigate details of a planned sale by Russia's Lukoil Oil Company of the country's largest oil refinery in Sicily, after the U.S. government privately raised concerns about the prospective buyer, the Financial Times said.

Litasco S.A. (a 100% subsidiary of the LUKOIL group) in January reached an agreement with G.O.I. Energy Limited on the sale of the ISAB S.r.L. oil refinery in Sicily. The transaction was supposed to close by the end of March 2023 after the fulfillment of suspensive conditions, such as receiving approvals from regulators, including the Italian government. To ensure the efficient operation of the complex following the acquisition, G.O.I. Energy formed a partnership with Trafigura, one of the world's largest oil and petroleum products traders, which would ensure the continuous supply of raw materials to the refinery, as well as the shipment of the refinery's products and the necessary level of working capital.

The plant, which is estimated to be worth 1.5 billion euros, was also of interest to American Crossbridge Energy Partners.

Citing informed sources, the Financial Times said that the Italian government needed additional time to review the deal, as the United States had asked Rome to confirm that Russia was not involved with G.O.I. energy.

Trafigura confirmed to the FT that executives, including oil-trading co-chief Ben Lacock, met with Italian officials this week to "answer their questions" but said the meeting was positive and the process is moving forward.

The U.S. State Department declined to comment on the information, adding that Lukoil and its Italian operations are not subject to U.S. sanctions. Meanwhile, the department emphasized the need for a thorough study of any transaction involving Russian energy assets.

G.O.I. Energy said it provided the Italian government with guarantees for effective management, production, financial and labor activities, as well as energy security. The company denies any Russian participation in its financing or operations, and maintains that the composition of the investors is "exclusively Greek, Israeli and Cypriot." Chairman of G.O.I. Energy Christodoulos Damianou is the Consul of Ukraine in Cyprus.

An Italian government spokesman declined to comment.

The ISAB refinery complex in southeastern Sicily is the third largest in Europe. The complex includes two oil refineries connected by a system of pipelines and integrated into a single technological complex with a total capacity of 16 million tonnes per year, as well as a tank farm with a volume of 3.7 million cubic meters and three sea berths. LUKOIL became the sole owner of the ISAB complex in 2013.

Rome did not nationalize the refinery after Russia started its special military operation in Ukraine, but gave itself veto power over any deal to sell the plant that could jeopardize operations or jobs. The European embargo on offshore imports of Russian oil, which came into force on December 5, complicated the situation with the provision of raw materials to the ISAB refinery in Sicily, which was dependent on offshore supplies from Lukoil. On the eve of the oil embargo, Litasco stated that it was ready to ensure uninterrupted operation of the enterprise, taking into account the raw materials accumulated in the coming months and future supplies of non-Russian oil. During the year, Lukoil was in negotiations with an American investment company to sell the refinery.

G.O.I. Energy is the energy arm of the Argus New Energy Fund with expertise across all asset classes. G.O.I. Energy is a partnership of leading experts with rich experience in refining, oil trading and refining financial restructuring. Investors G.O.I. Energy has a controlling interest in the Bazan Group, one of Israel's largest energy companies, which owns the country's largest oil refinery complex. CEO of G.O.I. Energy is Michael Bobrov, who previously headed Trafigura in Israel.