Italy races to review deal to sell Russia-owned refinery in Sicily

Italian officials are racing to review a deal to sell the country’s largest refinery after the US government privately raised concerns about the sale of the Russian-owned site to a little-known fund in Cyprus.

Russia’s Lukoil agreed in January to sell its Sicilian ISAB refinery to GOI Energy, a newly established branch of the Cypriot private equity group Argus.

The €1.5bn deal, which overtook a competing offer from US-based Crossbridge Energy Partners and oil trader Vitol, also involves commodity trader Trafigura. Trafigura will provide working capital and crude oil to the facility, and market the refined fuels its produces.

The transaction was expected to close by March 31, but Italian officials are taking extra time to review crucial details, according to two people briefed on the talks.

The additional time was required partly after the US government informally asked Rome to confirm that there is no Russian involvement in GOI Energy, the two people and one other also briefed on the talks said.

The ISAB refinery is one of the largest industrial sites in western Europe. It can process 320,000 barrels of oil a day, about a fifth of Italy’s refining capacity. Rome stopped short of nationalising it last year after Russia invaded Ukraine but placed it under a temporary trusteeship, giving it a veto over any deal to sell it that could jeopardise operations or jobs.

Trafigura confirmed that executives including its co-head of crude oil trading Ben Luckock had met Italian officials this week to “answer their questions” but said the meeting had been “positive” and that the process was advancing.

GOI Energy is run by chief executive Michael Bobrov, who used to head Trafigura’s operations in Israel.

One Italian official and one person close to GOI Energy said they were “optimistic” the deal would be approved next week.

The US State department declined to comment on any communication between US and Italian officials over the deal. It added that Lukoil and its Italian operations are not subject to US sanctions but stressed the need for scrutiny of any transaction involving Russian energy assets.

“It is important to recognise that the Russian government works aggressively to undermine judicial processes in the United States and Europe, especially in regard to sanctioned entities, so these cases must be treated with utmost scrutiny and security,” the US department said.

GOI Energy said it had provided the Italian government with full guarantees on governance, production, financial and employment continuity as well as energy security.

It categorically denied any Russian involvement in its funding or operations, saying its investor mix is “exclusively of Greek, Israeli and Cypriot”. It added that GOI Energy’s chair, Christodoulos Damianou, is Ukraine’s consul in Cyprus.

But two of the people briefed on the talks said Italian officials were still worried about some aspects of the transaction.

One senior Italian energy executive said it was worrying that “a group of unknown investors, running a newly created entity out of Cyprus, could acquire an asset deemed strategic by Rome”.

A spokesperson for Italy’s government declined to comment.