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Lukoil Looks To Sell Italian Refinery As Crimea Sanctions Intensify

Refinery

Lukoil will begin to shift its focus towards domestic production by selling off its Italian refinery complex, two oil industry sources told Reuters on Wednesday.

The move is part of the Russian firm’s drive to sell some of its foreign assets. The initiative is pushing Lukoil to put its Swiss energy trading wing Litasco up for sale as well, CEO Vagit Alekperov said earlier this month.

It’s not clear how much money Lukoil could get from a Litasco sale, as most oil and commodity traders are not listed. According to Reuters, the book values of Litasco’s competitors range from $2 billion and $6 billion. 

Lukoil VP Leonid Fedun declined to comment on the anticipated liquidations, saying only that “There has been interest towards all our foreign assets.” But none of the offers have seriously interested shareholders so far, the senior official added.

The ISAB refining complex in Italy has 320,000-barrels per day of processing capacity and 3,700 thousand cubic meters of storage capacity, the company website says.

Additional financial and technical information about ISAB has been made available to prospective investors “to test the market’s appetite,” industry sources told Reuters.

Part of the reason Lukoil is shifting its focus away from activities in Western Europe is the slew of sanctions levied against Russia by the European Union since Moscow’s annexation of Crimea. The company’s other refineries are located in Romania, Bulgaria, and the Netherlands.

Related: Is Artificial Intelligence The Next Step In Total's Tech Push?

Lukoil bought a stake in ISAB back in 2008 and then became its sole owner in 2014, just as oil markets crashed dramatically. Most of its final products are sold to Litasco for resale in global markets.

Lukoil—alongside Gazprom, Gazprom Neft, Surgutneftegas, and Rosneft—has been since 2014 on the U.S. Treasury sanctions list that prohibits the exports of goods, services (not including financial services), or technology in support of exploration or production for Russian deepwater, Arctic offshore, or shale projects that have the potential to produce oil. The latest U.S. sanctions, however, are still being studied by Western banks to fully understand the possible implications of doing business with Russia and what’s permitted and what is not.

By Zainab Calcuttawala for Oilprice.com

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  • Naomi on September 21 2017 said:
    Donbass and Crimea are scorched earth. Russians taught Ukraine how it's done. 130 million Russians are not eating well either.

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