FT: LUKOIL resumed negotiations with the American Crossbridge on the purchase of an Italian refinery

A month after LUKOIL’s refusal to sell an oil refinery (refinery) in Sicily to the American investment company Crossbridge Energy Partners, the parties resumed negotiations on the deal. According to sources Financial Times (FT), the refinery under the deal under discussion is estimated at €1-1.5 billion.

“LUKOIL insists on concluding a deal before EU sanctions against Russian offshore oil exports come into force next Monday,” the source said. The deal will be financed by energy trader Vitol, who will also sign a contract to sell oil as part of the refinery agreement.

The Italian government claims that the deal will require additional time to settle, due to the need to provide the refinery with operating funds.

In turn, Italian banks are afraid to finance a refinery owned by a Russian company. Because of this, negotiations are currently underway to provide financial institutions with guarantees from the US authorities that they will not fall under sanctions if the transaction is financed.

Economic Development Minister Adolfo Urso said nationalization of the plant could also be an option to keep the plant, but government officials said that was unlikely, according to the FT, as Rome would have to invest more than €1 billion in the plant and take part in the operation of the plant. On the government’s intention to nationalize the plant informed earlier newspaper La Repubblica, citing sources.

According to the interlocutors of the publication, the deal with LUKOIL was also discussed by representatives of the Singaporean company Trafigura. They declined to comment on the details of the talks.

The interest of the Italian government in concluding a deal is explained by the strategic importance of the refinery. It provides fuel for up to 22% of the country’s market and provides jobs for residents of poor areas of the region.

November 5 FT informed about LUKOIL’s refusal to sell the refinery due to doubts about Crossbridge’s ability to buy out the enterprise. LOIKoil acquired 49% of the refinery in 2008.

Andrey Sapozhnikov