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Lukoil Says Its Italian Refinery Will Continue Operations After EU Embargo

Lukoil, which owns a large refinery in Sicily in Italy, said on Friday that it is ready to ensure continued operations at the site after the EU embargo on imports of Russian crude by sea takes effect on December 5, thanks to oil storage and future deliveries of non-Russian oil.

Lukoil, which owns the ISAB refinery in Sicily, said via its unit LITASCO that “it is ready to ensure uninterrupted operation of the refinery, given the feedstock stored up for the coming months and future deliveries of non-Russian origin oil.”

The ISAB refinery “currently is a profit-making enterprise, a technologically advanced facility, and a reliable partner for all its clients, suppliers and contractors,” LITASCO said in a statement.

LITASCO also confirmed it was ready to cooperate with the Italian government “in order to ensure normal operation of the facility.”

On Thursday, Italy’s government approved a decree to intervene to guarantee the continued operation of the ISAB refinery and save around 1,000 jobs. The intervention could consist of placing the refinery under trusteeship, although Italian authorities are said to be looking to unlock bank financing for the facility.

Earlier this week, the Italian daily newspaper La Repubblica reported that the government could also consider nationalizing the Lukoil-owned refinery. The government has failed to obtain a derogation from the EU for using Russian crude oil, and it is now working on the details of how the Italian Treasury could end up owning the asset. 

Crossbridge Energy Partners, a U.S.-based private equity group, has resumed talks to buy the refinery from Lukoil, sources briefed on the issue told the Financial Times this week. Any deal, if it is reached, will need the approval of the Italian government, the sources said. 

A potential agreement could value the refinery at between $1.04 billion (1 billion euros) and $1.57 billion (1.5 billion euros), they told FT. 

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By Charles Kennedy for Oilprice.com

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