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Government sources have told Reuters that Italy may temporarily nationalize the ISAB refinery owned by Lukoil, Russia’s second-largest oil producer whose CEO resigned after being sanctioned by the UK and the European Union.
Reuters cited unnamed sources as stating that Italy’s Industry Minister plans to raise the issue at a Thursday cabinet meeting, though it is not currently on the agenda.
ISAB is owned by Litasco, a Swiss-based trading company, which is in turn controlled by Lukoil.
The ISAB refinery–the largest in Italy–is a major contributor to Italy’s refining capacity, accounting for some 22% of production. An estimated 30-40% of its input comes from Russia, according to Reuters. The news agency also cited ISAB’s deputy general manager as saying that the refinery would find it impossible to source crude oil input from elsewhere because it lacks “credit at the international level”.
Last week, Italy’s Ecological Transition Minister reportedly said that Italy could begin its road to independence from Russian oil by H2 2023, but not before, according to a Reuters report.
Bloomberg also reports that Lukoil managed to make a debt payment of over $34 million on the same day that Lukoil CEO Vagit Alekperov’s resignation was announced.
Alekperov owns over nearly 9% of Lukoil, with just over 3% of voting shares. He is worth an estimated $20 billion.
Lukoil produces some 2% of the world’s crude oil. The fact that the company has distanced itself from Russian President Vladimir Putin and criticized the invasion of Ukraine has not protected it from sanctions. Alekperov is known as a long-time Putin ally.
Alekperov resigned last week in order to protect the company's operations and investors.
In early March, the London Stock Exchange (LSE) suspended some 27 companies over Russia’s war on Ukraine.
Archived copies of tax payments to the Russian government show that Lukoil contributed more than 5 billion pounds to Putin’s war chest in 2020 alone, according to the Guardian.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com