Rome — Italy is trying to get U.S. authorities to reassure Italian banks they are not at risk of fines for breaching sanctions against Moscow if they help a Lukoil-owned refinery buy non-Russian oil and remain afloat, sources said.
The survival of the ISAB plant in Sicily is under threat due to a European embargo on seaborne Russian oil coming into effect on Dec. 5.
Prime Minister Giorgia Meloni’s government wants to salvage the refinery, which accounts for a fifth of Italy’s refining capacity and employs about 1,000 workers in an economically disadvantaged area.
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.
Its creditor banks have been wary of dealing with a Russian entity because Lukoil is affected by international sanctions in the United States, but not in Europe.
Asking not to be named, three sources close to the matter told Reuters the government was trying to overcome the banks’ resistance to providing finance to keep the plant going.
The government does not rule out stepping in directly to keep the plant in business, though it will first make a last-ditch attempt to broker a deal with the banks, one of the sources said.
For the time being, the government is trying to get a ‘comfort letter’ from U.S. authorities with reassurances in writing that the banks would not risk future fines, the sources said.
So far, however, there has been no positive response to Italy’s request, one of the sources said.
The Italian foreign ministry declined to comment. The U.S. embassy in Rome and Lukoil did not immediately respond to requests for comment.
The banks have also requested guarantees of up to 100% on the loans from state-owned credit export agency SACE – which would normally provides an 80% guarantee on similar transactions, another of the sources said.
A meeting with key government officials, SACE and the lenders is expected to take place on Wednesday.
A cabinet meeting on Thursday will also discuss steps aimed at helping the ISAB plant, one of the sources said.
Industry Minister Adolfo Urso said this month Rome was considering several options to keep the refinery operational, including asking the European Union for a temporary waiver on upcoming European sanctions.
The opposition Democratic Party presented to parliament a measure allowing Rome to place ISAB under state trusteeship, the same path followed by Germany which in September took control of a refinery owned by Russian oil firm Rosneft.
A change of owner would solve ISAB’s problems and a number of possible buyers, including U.S. investment platform Crossbridge Energy Partners, are currently looking at the asset.
Reporting by Giuseppe Fonte and Angelo Amante in Rome, Valentina Za and Francesca Landini in Milan; Editing by Mark Potter – Reuters
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