Lukoil resumes talks with US buyout group to promote Italian refinery

A US non-public fairness group has resumed talks to purchase Italy’s largest petroleum refinery from Russia’s Lukoil, though any deal would require the backing of Italy’s new nationalist authorities, folks briefed on the matter advised the Monetary Occasions.

Crossbridge Power Companions is negotiating an settlement with Lukoil that will worth Sicily-based ISAB refinery at €1bn-€1.5bn, the folks mentioned. World commodity dealer Vitol would assist to finance a deal, they added.

Talks between the US group and Lukoil started earlier this yr and accelerated on the finish of the summer season when Crossbridge executives carried out 12 days of due diligence on the plant within the Sicilian city of Priolo. However discussions got here to a halt on the finish of October.

Lukoil is pushing to get a deal accomplished earlier than EU sanctions concentrating on Russian seaborne oil exports come into full impact subsequent Monday. Italy’s authorities contends that any deal would require further time to settle, and it’s placing a precedence on getting banks to supply the refinery with working funds, officers mentioned.

Vitol would obtain a provide and offtake settlement as a part of the financing deal, mentioned the folks briefed on the talks, which might make it the important thing supplier of crude for the refinery and marketer of the fuels it produces. Vitol declined to remark.

The commodities buying and selling home Trafigura has additionally held talks with Lukoil a couple of potential deal in case negotiations with Crossbridge collapse, folks briefed on the matter mentioned. Trafigura declined to remark.

Any acquirer picked by Lukoil would want to acquire the backing of Giorgia Meloni’s new rightwing authorities, mentioned folks briefed in regards to the matter.

Italy is planning to purchase a minority stake within the Switzerland-based firm that Lukoil makes use of to manage the refinery by so-called “golden energy” rule, which permits Rome to intervene when there’s a perceived menace to an asset in a strategically necessary sector, reminiscent of vitality.

Meloni’s authorities needs reassurances that any new purchaser won’t minimize jobs or restructure the corporate in a means that harms one of many poorest elements of the nation. The refinery is answerable for producing 22 per cent of Italy’s street fuels.

Italy additionally needs to make sure that ISAB has ample funds for day by day operations earlier than takeover talks advance. The refinery is in dire want of just about €1bn, however lenders have refused to reopen credit score strains they shut after Russia invaded Ukraine early within the yr, mentioned folks near the talks between the banks and Lukoil.

Banks have hesitated as a result of they concern US fines for offering funding to a Russian-owned entity, the folks mentioned. Italian officers advised representatives of UniCredit, Intesa Sanpaolo, Monte dei Paschi di Siena and Banca Popolare di Milano at a gathering this week that they might search assurances from US authorities that the lenders wouldn’t incur fines for breaching sanctions in opposition to Russia now or sooner or later, mentioned folks with information of the talks.

Financial growth minister Adolfo Urso mentioned Italy would provide you with an answer for the Lukoil refinery by mid-December. “The Priolo plant is a strategic asset for our productive system and for our chemical sector notably, subsequently this can be a matter of nationwide curiosity,” Urso mentioned in November.

Urso additionally mentioned nationalisation was an possibility, however authorities officers mentioned it was unlikely as a result of Rome must stump up greater than €1bn and turn out to be concerned within the plant’s operations. The “golden energy” possibility would give Italy a possibility to amass a minority stake and management the plant.

The Priolo refinery employs greater than 1,000 folks and not directly helps hundreds of jobs in satellite tv for pc actions within the space. Crossbridge is able to decide to “zero cuts”, mentioned an individual with direct information of negotiations.

The Italian treasury declined to remark. The ministry for financial growth couldn’t be reached for remark.