Italy seeks to unlock financing for Lukoil-owned refinery – sources
- Factory threatened by ban on Russian oil transported by sea
- The government is working to find alternative suppliers
- Eye “comfort” letter to reassure creditors and suppliers
ROME, Oct 27 (Reuters) – Italy is working on ways to keep a refinery owned by Lukoil (LKOH.MM) running despite new sanctions on Russia coming into force next month as Rome tries to win time to agree on the sale of the plant, three sources familiar with the matter told Reuters.
ISAB’s Lukoil refinery in Sicily is at risk of being hit by an embargo on Russian oil transported by sea which will come into force on December 5, jeopardizing jobs in Italy’s poorest south and the ability to country refining.
Although Lukoil is not affected by the sanctions, the ISAB plant was forced to rely solely on Russian oil after creditor banks cut off funding and stopped providing the guarantees the refinery needs to buy oil from Russia. alternative providers.
Adolfo Urso, industry minister in Italy’s new government, said on Thursday that a solution would be found in the coming weeks.
The sources said the government was trying to find ways to ensure the plant could receive funding from lenders and remain operational.
The issue was discussed at a meeting at Italy’s industry ministry on Oct. 17 with representatives of Italy’s two main banks, Intesa Sanpaolo (ISP.MI) and UniCredit (CRDI.MI), and state agency of export credit SACE, minutes of the meeting seen by Reuters showed this.
Lukoil was not immediately available for comment.
Discussions focused on the possibility of state-guaranteed financing provided by Intesa and UniCredit with guarantees from SACE. If safeguards are not in place until mid-December, the plant risks operating below full capacity until March 2023, ISAB officials have warned.
One option being discussed is a “comfort” letter from the Italian authorities to reassure ISAB suppliers and creditor banks, whose compliance departments are concerned about the risks of dealing with a Russian entity.
The aim is to enable ISAB to buy the oil it needs elsewhere, two of the sources said.
The government pass would come from the Financial Security Committee, which is headed by the Italian Treasury and is responsible for enforcing sanctions against Russia, one of the sources said, adding that the plan was not yet finalized. .
A sale to non-Russian buyers would avoid the closure of the ISAB plant, which accounts for around 20% of Italy’s refining capacity and directly employs some 1,000 workers.
US private equity fund Crossbridge Energy Partners is among parties interested in buying the refinery, Reuters previously reported.
Talks between Crossbridge and ISAB’s owner unit Lukoil Litasco are progressing, one of the sources said, adding that Crossbridge is already working on a medium-term plan to convert the plant to produce greener products. , based on work he has done on a similar plant. bought in Denmark.
Reporting by Giuseppe Fonte and Angelo Amante in Rome, and Francesca Landini in Milan; Additional reporting and editing by Valentina Za; Editing by David Holmes
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