MILAN (TAUT) — Even as the European Union moved to cut imports of Russian crude oil by 90% by the end of the year, Italy has become the only country in Europe to increase them, unintended consequence of EU sanctions against Russia.
Intended to punish Russia for invading Ukraine, the EU oil embargo now endangers one of Italy’s largest refineries, located in Sicily, which would deal an economic blow to the economy of the depressed region.
Italy has agreed with its EU partners to reduce imports of Russian crude by 2023, a move Prime Minister Mario Draghi called a “complete success”, which “just a few days ago n would not have been credible”.
But Rome must also deal with the fate of the Sicilian refinery of the Russian Lukoil. Following previous sanctions against Russia, ISAB Srl paradoxically went from processing 15% of Russian crude to 100%.
That’s because the banks refused to take the risk of giving the Russian-controlled ISAB credit that would allow it to buy oil from non-Russian sources, even though it’s not specifically prohibited. said Matteo Villa, energy analyst at ISPI. reservoir in Milan.
Ships continue to arrive at the port refinery with crude oil from the Russian parent company.
Italy received around 400,000 barrels of Russian oil a day in May, four times pre-invasion levels, according to commodity data firm Kpler. Of this total, ISAB received 220,000 barrels per day from Russia.
“Italy is the only country in Europe to increase its oil imports,” Villa said, rising from the sixth importer of Russian oil to the first in the three months following the invasion.
The plant employs 3,500 people at three production sites, including a refinery, a gasification and electricity cogeneration plant, in the province of Syracuse in Sicily, and risks closing if a solution is not found before start of the embargo. The plant and related activities generate half of the province’s gross domestic product and 8% of the region’s economic activity, processing a fifth of Italy’s crude oil imports.
The refinery’s future was already in jeopardy in the longer term, due to Italy’s energy transition to more sustainable sources. The embargo only increased the sense of urgency to find a solution.
“Today’s mood is even worse than yesterday,” said Fiorenzo Amato, general secretary of the Filctem Cgil union in Syracuse. “The industrial pole (…) employs many people, giving families the chance to live.”
Since learning of the embargo, refinery workers have become increasingly concerned about their future.
“It will be a disaster,” said Marco Candelargiu. “We hope they find a solution. You cannot destroy a province. The choice was made a long time ago to base the economy essentially on the refinery.
Villa said one solution would be for Italy to temporarily nationalize the refinery, a move allowed for energy emergencies under Italy’s constitution, but a week of talks yielded no agreement.
As an Italian refinery, ISAB would be able to secure the necessary financing to purchase crude from other sources and continue to operate while longer-term solutions are sought.
“It’s important for employment in Sicily, for Italy’s petrol and diesel supply and for our own political salvation in Europe,” Villa said.
Extracted in full from: Italy imports more Russian oil despite impending embargo – The AU Times