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In its first major overseas asset sale following Russia’s invasion of Ukraine and subsequent Western sanctions, Lukoil, Russia’s second-largest oil company, has agreed to sell its Italian ISAB refinery to a Cypriot company backed by Geneva-based commodities trader Trafigura.
The deal will see Lukoil’s 100% subsidiary, Litasco S.A., sell the ISAB refinery to Cyprus-based G.O.I. Energy Limited, a private equity firm backed by Trafigura, according to a statement on Lukoil’s website. The deal value was not disclosed.
According to Lukoil, the transaction is expected to be completed by the end of March this year upon fulfillment of “certain conditions precedent including receipt of necessary approvals of competent authorities, particularly the Italian Government”.
ISAB encompasses a large petrochemical complex in Italy, which combines refining, gasification and electricity cogeneration plants.
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 Trafigure to handle oil supplies for the Italian refinery, should the Italian government agree to the sale.
ISAB is an important strategic asset for Italy, refining approximately one-fifth of Italy’s crude oil, according to Reuters. As of December 5th, in line with the European Union ban on Russian seaborne crude, the ISAB refinery is no longer permitted to import Russian oil.
In early December, the Italian government said it was considering direct state intervention to keep the refinery running after December 5th, noting that ISAB had been forced to rely fully on Russian oil because banks halted financing and guarantees for other oil purchases, Reuters reported.
Lukoil also owns a network of some 230 branded gas stations in the United States, distributing in 11 states.
At the beginning of Russia’s invasion of Ukraine, these gas stations garnered much media attention, with vague calls for boycotts. Those calls, however, dissipated by the end of March, when it became clear that boycotting them would harm the American franchise owners.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com