Milan, Italy: Just when the European Union decided to cut Russian crude oil imports by 90% by the end of 2022, Italy has become the only country in Europe to increase them, an unintended consequence of EU sanctions against Russia.
A few days ago, Italy agreed with its EU partners to cut Russian crude imports by 2023, a move that Premier Mario Draghi called "a complete success." But Rome also has to deal with the fate of the refinery owned by Russia's Lukoil located in Sicily. As a result, ISAB Srl is now processing 100% of Russian crude, which was at 15% prior to the new sanctions.
The sanctions were implemented to weaken Russia for invading Ukraine, but the EU oil embargo means Italy's largest refineries, located in Sicily, are at risk and the country will be a big blow to the depressed region's economy.
Matteo Villa, an energy analyst at the ISPI think tank in Milan, said, that's because banks have refused to take the risk of extending credit to Russia-controlled ISAB that would allow it to buy oil from non-Russian sources, even if not specifically barred from doing so.
In the month on May, Italy received about 400,000 barrels of Russian oil a day, four times more than it received prior to the invasion, of which, 220,000 barrels went to ISAB, according to the Kpler commodity data company. Italy was the sixth largest importer of Russian oil, but since the invasion, it has become the largest importer. Villa said, "Italy is the only country in Europe increasing oil imports."
Although the refinery's future is already at risk due to Italy's energy transition to more sustainable sources, current situation could mean closure if a solution isn't found before the embargo kicks in.
The plant is located in Sicily's Syracuse province and employs 3,500 people at three production sites. It is responsible for 8% of the region's economic activity, generates half of the provincial gross domestic product and is processing one-fifth of Italy's crude oil imports.
The embargo has only increased the sense of urgency to find a solution.
Fiorenzo Amato, the secretary general of the Filctem Cgil union in Syracuse, said, "The mood today is even worse than yesterday. The industrial hub employs many people, giving families the chance to live."
Since becoming aware about the embargo, refinery workers are growing more concerned about their future.
Source: The Associated Press
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