Cypriot fund keeps Lukoil’s sanctioned plant in the game

A Lukoil refinery in Italy might survive sanctions against Russia if it falls in the hands of a Cypriot private equity fund, with the company saying the sale could take place by March of this year after turning down a US offer two months ago.

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Russian oil company Lukoil is reportedly moving forward with selling its Isab di Priolo refinery to GOI Energy, an Israeli-interest subsidiary of Cypriot-based Argus fund.

The sale of the plant in Sicily comes after months of talks amid disorder in the energy market during the war in Ukraine, as Moscow and western capitals have been moving to confiscate assets linked to each other.

Italian media had been reporting on a possible nationalization or even closure of the plant but another scenario emerged at the last minute when the Israel-backed fund through Cyprus upped a previous offer by American interests.

Experts said the sale was inevitable after the plant, which had been relying on Russian oil supplies from Lukoil, could no longer continue to operate due to EU sanctions against Russia in December.

Last year Lukoil was criticized by Ukrainians in Europe who accused the Russian company of having connections to the Kremlin.

A Lukoil statement in March 2022 said the company was deeply concerned about the “tragic events in Ukraine” and called "for the soonest termination of the armed conflict.”

But pressure kept mounting on CEO Vagit Alekperov, who was sanctioned by a number of western countries, forcing the Lukoil founder to step down in April.

Months later Ukrainian protesters in Belgium kept up the pressure by calling for a boycott in June against Lukoil, while the company’s chairman Ravil Maganov died months later after falling from a window at a hospital in Moscow where he was receiving medical treatment for severe illness.

But Ukraine and Russia have not been the sole factors in refinery closures in Europe.

Experts say ageing refineries in Europe have been outcompeted by larger and more modern facilities in Asia.