Here is the Meloni government’s plan for Priolo’s Isab (Lukoil).
To save Isab di Priolo, one of the most important oil refineries in Italy and Europe, the Meloni government has ordered a de facto nationalisation. Will Eni have a role? Meanwhile, negotiations have been reopened with the American fund Crossbridge. All the details
In a few days, on December 5, the European ban on the purchase of Russian oil transported by ship, the most widely used method, will come into force. The embargo is a significant problem for Italy, which – despite the war in Ukraine – has become one of the world's largest importers of crude oil from Russia.
THE SITUATION OF ISAB DI PRIOLO
The reason lies in the ISAB of Priolo Gargallo, in Sicily: it is one of the largest refineries in Europe, which has a thousand employees, satisfies 20 percent of the Sicilian demand for electricity and alone is worth over a fifth of the national capacity refining.
The plant is owned by the Russian oil company LUKoil, and this link prevents ISAB from obtaining the necessary credit from the banks to purchase barrels of non-Russian origin (LUKoil has not been sanctioned, but financial institutions prefer not to engage with Russian subjects) .
As a result, today Russia's share of total oil imported by ISAB is over 90 per cent; before the war it was 30 per cent.
WHAT THE DRAGHI GOVERNMENT HAS (NOT) DONE
There are two options available to unblock the situation: nationalize ISAB, or sell it to a non-Russian private entity.
The previous government of Mario Draghi chose not to proceed with the nationalization, focusing on the second possibility. The US investment fund Crossbridge Energy Partners had shown interest in buying the plant.
THE DECISION OF THE MELONI GOVERNMENT
On Thursday, the government chaired by Giorgia Meloni drew up a plan to place ISAB in temporary trusteeship, so as to avoid its closure due to the imminent European oil ban .
The trusteeship will last for one year, extendable once for another twelve months, and consists in fact of a nationalisation, albeit not a formal one.
WHAT THE LAW DECREE SAYS
The governmentpress release on the decree passed on December 1 does not explicitly mention ISAB or Russia, but the reference is clear.
The temporary administration – it reads – will in fact be applied to those companies that manage hydrocarbon refining plants that run "imminent risks of production continuity suitable for causing prejudice to the national interest, consequent to sanctions imposed in the context of international relations between States ”. And it will have the objective "to guarantee, by any means, the security of supplies, as well as the maintenance, safety and operation of the networks and plants and therefore production continuity".
A ROLE FOR ENI IN ISAB?
The text also specifies that the "ministerial commissioner" who will lead ISAB "may also avail himself of publicly controlled companies operating in the same sector and without prejudice to the rules on the subject of competition".
A Reuters source said that the Meloni government wants to leave open the possibility of an involvement of ENI (whose major shareholders are Cassa depositi e prestiti and the Ministry of Economy) in the management of the refinery alongside the government.
WHAT CDP AND SACE WILL DO
Government intervention should allow ISAB to receive loans from banks, which it can use to buy oil from other suppliers.
Corriere della Sera writes about a "consortium" of banks such as Intesa Sanpaolo, UniCredit, Monte dei Paschi di Siena, Banco BPM and Mediocredito Centrale. The participation of Cassa depositi e prestiti and SACE, a company controlled by the Ministry of the Economy, is likely, which will provide the guarantee on bank loans for a total of 600 million euros with coverage of up to 90 per cent (usually the state guarantee is 70 percent). The remaining 10 percent would be covered by the Sicily Region and the Ministry of the Economy.
THE RETURN OF CROSSBRIDGE?
At the same time, negotiations were reopened between ISAB and Crossbridge Energy Partners, whose investments are concentrated precisely in energy infrastructures and which valued the plant at between 1 and 1.5 billion euro.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/isab-priolo-amministrazione-fiduciaria/ on Fri, 02 Dec 2022 09:09:58 +0000.