Although the European Union members have agreed to embargo Russian crude oil imports by 90% by the end of 2022, there’s however an unintended consequence of the sanctions against Moscow – in Italy.
Though it agreed with its partners to cut Russian crude imports by 2023, Italy will become the only EU country to increase them since the EU oil embargo is putting at risk one of its largest refineries, located in Sicily, which would deal an economic blow to the depressed region’s economy.
The Italian Prime Minister Mario Draghi also has to deal with the fate of the Sicily refinery that’s processing one-fifth of Italy’s crude oil imports – since it’s owned by Russia’s Lukoil – that generates half of the provincial GDP and 8% of the region’s economic activity.
ISAB Srl has paradoxically gone from processing 15% of Russian crude to 100% due to the previous sanctions against Russia after banks have refused the extend ISAB’s credit that would allow it to buy oil from non-Russian sources.
According to the Kepler commodity data company, Italy received in May four times the pre-invasion levels of Russian oil – about 400,000 BPD, out of which 220,000 barrels a day went to ISAB
Meanwhile, the ships continue to bring crude oil from the Russian parent company at the port-side plant in Sicily’s Syracuse province that employs 3,500 people at three production sites, including a refinery, gasification, and electricity cogeneration plant.
Matteo Villa, an energy analyst at the ISPI think tank in Milan, explains that the bank made such a decision to avoid taking the risk to give money to a Russia-controlled refinery even if not specifically barred from doing so.
Villa said that in the three months since the invasion, Italy went from being the sixth-largest importer of Russian oil to become the largest one.
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