Russia’s Lukoil has turned down a suggestion to sell its Italian refinery to a US private equity group in a choice that dangers bankrupting the Sicilian plant and costing hundreds of jobs.
Commodity dealer Vitol had provided financing to Crossbridge Power Companions to assist with the acquisition of the Priolo refinery after the Russian group raised issues in regards to the US buyout group’s potential to pay for the deal.
Nevertheless, in accordance with a number of individuals near the talks, Lukoil stays reluctant to promote to the US buyout fund. Vitol was keen to increase credit score to Crossbridge at a fee higher than the US group may get from a conventional lender because it stood to profit from supplying crude to the Italian refinery.
The deal would have helped keep away from Italy nationalising the Sicilian plant, which is going through a cliff-edge in its crude provides when EU sanctions focusing on Russian seaborne oil exports come into full impact subsequent month.
Earlier than the outbreak of the struggle in Ukraine the refinery sourced its crude from a wide range of international locations however lenders stopped offering financing after the EU imposed sanctions on Moscow, forcing the refinery to rely completely on its Russian mother or father firm for crude.
A sale to non-Russian homeowners would enable the plant, which provides 22 per cent of Italian highway fuels, to hunt various sources of oil.
Financial improvement minister Adolfo Urso mentioned the federal government was working to keep away from the plant’s shutdown, with nationalisation among the many choices on the desk.
Italian officers near the talks mentioned the ISAB Lukoil refinery had requested a pool of banks for €700mn in financing because it was struggling to pay its power payments; nonetheless, Italian banks are reluctant to tackle such threat.
Publicly-backed lender SACE may again a part of the mortgage to ISAB Lukoil, the individuals mentioned. Nevertheless, the banks are refusing to budge, in accordance with two Italian officers, even after the Italian treasury’s director-general, Alessandro Rivera, despatched them a “consolation letter” to verify the corporate and its homeowners weren’t targets of EU sanctions.
“If the Russians don’t need to promote to the Individuals and the banks refuse to reopen the credit score strains, nationalisation is the one choice left,” mentioned one of many Italian officers.
A number of European nations have opted to nationalise Russian-owned power belongings to maintain costs down and save jobs. Italy has to this point refused to discover a nationalisation of the Lukoil plant regardless of the menace to home jobs and gasoline provides.
The Sicilian plant employs greater than 1,000 individuals in one of many poorest areas of the nation and not directly helps hundreds of jobs in satellite tv for pc actions within the space.
Diego Bivona, president of a Sicilian chapter of Italy’s nationwide business physique Confindustria, informed native media “nothing occurred over these previous months and it’s unclear how anybody desires to resolve this downside which isn’t merely native however nationwide and strategic.”
The Monetary Instances reported in September that Crossbridge had emerged because the frontrunner to amass the refinery after spending 12 days finishing up due diligence at Lukoil’s ISAB facility.
The buyout agency had explored a joint bid with Vitol however on the time the US agency mentioned it favoured shopping for the asset by itself.
Vitol and Crossbridge additionally held talks with members of the earlier authorities led by prime minister Mario Draghi however failed to succeed in a breakthrough.
The final Russian crude oil order shall be submitted on Monday, in accordance with Italian media stories.
Vitol and SACE declined to remark. The Italian treasury didn’t instantly reply to a request for remark. ISAB Lukoil didn’t reply to a request for remark.