Russia's Lukoil rejects US buyout firm's offer to buy its Sicily refinery
07 November 2022
Russia’s Lukoil has rejected US buy-out firm Crossbridge Energy Partners’ offer to buy its fund-starved oil refinery in Sicily, Italy as it doubted the firm's ability to pay for the deal, reports citing sources close to the development said on Friday.
Lukoil's ISAB refinery in Sicily accounts for around 20 per cent of Italian refining capacity. But ISAB has been forced to rely solely on Russian oil after creditor banks halted financing and stopped providing guarantees needed to buy oil from alternative suppliers.
Lukoil was hit by western sanctions ever since the outbreak of the war in Ukraine. The refinery that sourced its crude from a variety of countries was forced to rely entirely on Russian supplies as lenders stopped providing financing.
The solution now offered to Lukoil is to sell the refinery to non-Russian owners who would be able to source crude and credit elsewhere.
Italy’s economic development minister Adolfo Urso said the government was weighing options, including nationalisation, of the plant, in order to avoid the plant’s shutdown.
Lukoil is one of the largest publicly traded, vertically integrated oil and gas companies in the world accounting around 2 per cent of the world's oil production and around 1 per cent of the proved hydrocarbon reserves.
With operations in 30 countries, Lukoil supplies energy to consumers in over 100 countries around the globe through the supply of power and heat. The company employs over 100,000 people across the world.
Meanwhile, commodities trading giant Vitol is reported to have offered to finance the deal at a much lower rate than the US fund could get from a traditional lender, newspaper reports said.