Negotiations between Lukoil and Crossbridge accelerated amid concerns over the possibility that the Isab refinery could end up under a trusteeship. Credit: Tasos Mansour on Unsplash.

Russia’s Lukoil is nearing a deal to sell its Isab refinery in Sicily, Italy, to US-based private equity firm Crossbridge, reported Reuters, citing three sources with knowledge of the matter.

A potential transaction between Lukoil and Crossbridge could be worth approximately €1.5bn ($1.58bn) and could be supported by Swiss commodity trader Vitol, two of the sources said.

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The Lukoil-owned Isab refinery directly employs 1,000 people. It is capable of refining a fifth of the European country’s crude.

Last week, Reuters reported that Italy approved a decree to place the refinery under a temporary trusteeship to prevent potential job cuts and reduced fuel production.

The Italian Industry Ministry was cited by the news agency as saying that the temporary trusteeship was approved for up to one year and is extendable for another year, in the hydrocarbons sector, ‘in the event of serious and imminent danger’ to secure energy supplies.

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One of the sources said that negotiations between Lukoil and Crossbridge accelerated amid concerns over possibilities that the Isab refinery could end up under a trusteeship.

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According to a fourth source, revenue from the Italian refinery are anticipated to more than triple in 2022. This could surpass €10bn ($10.55bn) due to higher diesel and gasoline prices.

A potential agreement to sell the refinery, if signed, will be subject to government scrutiny.

In recent months, the refinery had relied primarily on crude from Russia. However, it is now unable to take its mainstay feedstock following the European Union embargo that came into force recently.