Russia’s Lukoil has agreed to promote its Sicilian refinery to an Israeli-backed non-public fairness fund that has partnered with commodities dealer Trafigura in a last-minute bid that gazumped a proposal from US-based Crossbridge Power Companions and oil dealer Vitol.
The deal, anticipated to shut by the top of March, will enable the plant to keep away from nationalisation or closure after EU sanctions reduce it off from Russian oil provides in December.
Two individuals near the transaction stated GOI Power would pay Lukoil — the most important non-state owned Russian oil firm — about €1.5bn to accumulate the ability, which may course of roughly 355,000 barrels of oil a day.
Trafigura, one of many largest commodity merchants, won’t take a direct stake within the plant however will assist present it with working capital and crude oil, whereas advertising the refined fuels it produces beneath an unique provide and offtake settlement.
The deal is important for the Italian authorities that had feared the closure of one of many largest industrial websites in western Europe after banks turned away from Lukoil following Russia’s invasion of Ukraine.
Individuals near Italian financial improvement minister Adolfo Urso stated the acquisition could be topic to “the standard checks when it comes to antitrust and environmental guidelines in addition to the upkeep of manufacturing and employment ranges”.
The plant had initially continued operations by relying solely on Russian oil provides from Lukoil, however since December EU sanctions have banned its seaborne import from Russia.
The Italian authorities additionally handed an emergency decree final month to verify it had the powers to safe the plant’s operations, together with by way of a brief nationalisation if Lukoil didn’t agree a sale.
GOI is an arm of Argus New Power Group, a non-public fairness fund primarily backed by Israeli buyers, in line with individuals conversant in its operations.
Its chief government is Michael Bobrov, who used to run Trafigura’s operations in Israel. Bobrov additionally has a stake within the Bazan Group, which operates Israel’s largest oil refinery, by way of one other car.
The deal will assist enhance buying and selling volumes for Trafigura after it stopped advertising crude for Rosneft, Russia’s state-backed oil champion, following the Ukraine invasion.
Crossbridge had been in on-off talks with Lukoil for a number of months. Late final 12 months it was near reaching an settlement to purchase the refinery as a part of a proposal backed by Vitol, considered one of Trafigura’s essential rivals.
Individuals with direct information of the talks stated Rome and native commerce unions had been involved, nonetheless, {that a} sale to Crossbridge may have led to job cuts. An individual near Crossbridge denied it deliberate to chop the variety of staff, expressing shock that the bid was rejected after months of talks.
An Italian official stated the selection had come all the way down to the perfect financial supply. Crossbridge had provided about $1bn, in line with an individual with direct information.
The Sicilian plant employs greater than 1,000 individuals and not directly helps about 2,000 jobs in one of many poorest areas of Italy.
Ben Luckock, co-head of oil buying and selling at Trafigura, stated the construction of the deal was a “smart mannequin” for the trade and indicated the commodity home could be open to replicating it sooner or later.
“It brings collectively a bunch of buyers that need direct publicity to refining with a logistics professional in Trafigura that may present help,” Luckock stated.
Refining margins in Europe have been sturdy over the previous 12 months, boosted by demand recovering from the pandemic and the lack of some refined oil gross sales from Russia after the invasion. From February, the EU will even ban most refined fuels being imported from Russia.
In recent times, nonetheless, some European refineries have closed with ageing vegetation struggling to compete in opposition to bigger, extra fashionable services in Asia. Questions additionally stay over demand given the EU’s push to chop emissions.
