Russia oil sanctions could halt Lukoil Italy refinery -Sicily president

European sanctions against Russian oil imports could paralyse Lukoil's Italian refinery ISAB and trigger a local jobs crisis, the president of the Sicily region said on Tuesday.

European sanctions against Russian oil imports could paralyse Lukoil's Italian refinery ISAB and trigger a local jobs crisis, the president of the Sicily region said on Tuesday. European Union leaders agreed overnight a gradual embargo, with some exemptions, of Russian crude. It will start kicking in towards year end.

The ban on seaborne imports could severely impact ISAB which is Italy's biggest refinery by capacity, Sicily's Nello Musumeci said, calling on the Italian government to deal with the issue. "There is a deafening silence on the employment catastrophe that could engulf part of the Priolo petrochemical plant, with the embargo and the consequent paralysis of ISAB," Musumeci said in a post on Facebook, asking for an urgent meeting with Rome.

Last month sources told Reuters temporary nationalisation of ISAB was one option the government was considering in case of sanctions on Russian oil. The industry ministry is looking into the idea of making the area around the town of Priolo eligible for government intervention to support the plant, sources said on Tuesday.

The ISAB refinery accounts for around 20% of Italian refining capacity and the power plant at the site provides Sicily with some 20% of its electricity. ISAB, which employs around 1,000 workers, used to buy 30-40% of its feedstock from Russia, with the rest coming from international markets.

Since Russia's invasion of Ukraine, though, it has had to source nearly all its crude from Lukoil because international banks are no longer providing it with credit. The government should intervene with the banks so they reopen credit lines blocked to Lukoil, trade union FILCTEM CGIL said, adding this would allow the purchase of crude oil on the market.

ISAB Deputy General Manager Claudio Geraci declined to comment on the situation but said that for now production at the refinery was normal, with cargoes arriving regularly. The refinery is owned by Swiss-based trading and supply group Litasco SA, which sells 89% of its output.

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