LUKOIL agrees to sell Italian refinery to private equity firm

PJSC LUKOIL announced that LITASCO S.A., a 100% subsidiary of LUKOIL, has reached an agreement with G.O.I. Energy Limited regarding the sale of ISAB S.r.L. to G.O.I. Energy. 

The sale is the first major overseas asset sale by Russia’s second largest oil company, following Russia’s invasion of Ukraine.

Based in Cyprus, G.O.I. Energy is a private equity firm run by Michael Bobrov, CEO of Green Oil. Green Oil is a major stakeholder of Israel’s largest refiner, the Bazan Group, formerly Oil Refineries Ltd.

The transaction is planned to be completed by the end of March 2023, upon fulfillment of certain conditions, including the receipt of necessary approvals of competent authorities, particularly the Italian Government.

ISAB is an important strategic asset for Italy, refining approximately one-fifth of Italy’s crude oil. As of December 5, 2022, ISAB is no longer permitted to import Russian oil,  in line with the European Union ban on Russian seaborne crude.

G.O.I. ENERGY has formed a partnership with TRAFIGURA, one of the world’s largest international traders of crude oil and petroleum products, to secure uninterrupted feedstock supplies to the refinery. The transaction also provides for production offtake as well as necessary working capital level. 

ISAB S.r.L. owns a large petrochemical complex in Italy combining refining, gasification and electricity cogeneration plants. ISAB’s refining, gasification and electricity cogeneration plants, which are located in the petrochemical complex of Augusta-Priolo, a vast industrialized coastal area in eastern Sicily including the territory of the municipalities of Augusta, Priolo Gargallo and Melilli. The petrochemical complex represents one of the largest industrial sites in Europe and consists of three production sites interconnected through a system of pipelines. 

ISAB S.r.l. is the last refinery built and started up in Italy. ISAB S.r.l. consists of three production sites called “SOUTH Plants”, “NORTH Plants” and “IGCC” (Integrated Gasification Combined Cycle) interconnected through a system of pipelines.

The SOUTH Plants were started to be built in 1972 as a stand-alone refinery and was originally called ISAB (Industry of Sicilian Asphalt and Bitumen). The plants went into production in 1975 with a refining capacity of 11 million tonnes of crude oil per year, which was increased in 1997 to 12 million tonnes.

The NORTH Plants, built in the mid-1950’s as a petrochemical site was originally called SINCAT (Catanese Industrial Company), and went into production in the ‘60s with a refining capacity of more than 17 million tonnes. After various assignments and transfers, the last to ENI AGIP, the ERG Group bought the North Plants, including the refineries, tankage and jetties in 2002, connecting it with the SOUTH Plants to create a “super-site” refinery called ERG Raffinerie Mediterranee — Raffineria ISAB.

In 2008, ERG sold a 49% share of ISAB to LUKOIL, with a so-called “put” option. Following the exercise, in various tranches, by ERG of the put option, on January 1, 2014, LUKOIL became the sole stakeholder of ISAB.