Italy Conditionally Approves Lukoil-Owned Refinery Sale

Reuters, April 11, 2023

Italy gave conditional approval on Tuesday to the sale of the Lukoil-owned refinery (LKOH.MM) in Sicily to Cypriot private equity firm G.O.I. Energy, people familiar with the matter told Reuters.

The government has the power to review the transaction under a "golden power" regulation designed to shield industries deemed of strategic importance in sectors such as banking, energy, telecoms and health.

The ISAB plant owned by Russia's Lukoil refines 320,000 barrels of crude per day, accounting for a fifth of Italy's refining capacity, and directly employs about 1,000 people in an economically depressed area in the country's southernmost region.

Lukoil said in January it had reached a preliminary deal to sell the refinery to G.O.I Energy, paving the way for its first significant asset disposal since Russia's invasion of Ukraine.

With backing from commodity trader Trafigura, G.O.I. Energy has prevailed over several suitors for the refinery, including U.S. investment platform Crossbridge.

One of the sources said Italy's Cabinet had imposed severe conditions on the deal, without blocking it.

The government requested that jobs be protected and environmental standards maintained in the sale of the plant.

Rome also asked G.O.I. Energy to guarantee oil supplies from producing countries other than Russia, the sources added.

Italy's use of golden powers in most cases results in deals being approved with binding conditions to preserve the national interest.

There has been speculation that the United States was concerned over the sale of the ISAB refinery, located in Priolo, because the plant is only about 50 kilometres from a NATO base in Sigonella.

G.O.I Energy in a statement in February said that neither the company nor Chief Executive Michael Bobrov has any connection with Russia.

(Reporting by Giuseppe Fonte; Editing by Gavin Jones, Mike Harrison and Leslie Adler)

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