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The Italian government has given conditional approval for the sale of a refinery owned by Russia’s Lukoil to a Cyprus-based private equity firm, Reuters has reported, citing unnamed sources in the know.
The conditions set by the Italian government for buyer G.O.I. Energy include guarantees that no jobs will be cut and a commitment to secure crude oil for the refinery from producers other than Russia.
To greenlight the deal, the government used its “golden power” prerogative that allows it to review and approve deals that are considered to be of strategic importance in industries including energy, banking, and healthcare.
The ISAB refinery, located in southern Italy, has a capacity of 320,000 bpd, accounting for as much as 20 percent of Italy’s total refining capacity. Its continued operation came under threat last year, however, when the European Union imposed an embargo on Russian crude oil imports.
In response, as a temporary measure, the Italian government put the refinery under trusteeship, with a sale seen as the best course of action going forward. In case the refinery could not be sold, the government considered nationalizing it.
At the time, there were reports that Crossbridge Energy Partners, a U.S.-based private equity group, was in talks to buy the refinery from Lukoil, and that a deal could see the refinery valued at over $1 billion.
In January, however, it emerged that Lukoil is considering a sale to the Cypriot private equity company, which is financially backed by commodity major Trafigura.
Cyprus-based G.O.I Energy is run by Israeli Green Oil CEO Michael Bobrov, according to Reuters, while Green Oil holds a major stake in Bazan Group, Israel’s largest refiner.
The deal will allow Western-based Trafigura to handle oil supplies for the Italian refinery, should the Italian government agree to the sale. At the time, Lukoil expected the sale to close by the end of March.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com