Isab, four issues for Ludoil to resolve
August saw the two main regulatory hurdles for the change of control at Isab cleared. On 4 August, the Competition Authority decided not to launch an investigation into Ludoil’s acquisition of a 51 per cent stake, considering that the transaction was not likely to significantly impede competition. The following day, 5 August, the Golden Power Commission also gave the go-ahead, subject to certain conditions. The focus now shifts from regulatory approvals to industrial considerations.
And the stakes are high for the entire national energy system. The Priolo complex is Italia’s largest refining hub: it can process around 320,000 barrels per day – equivalent to almost 19 per cent of national capacity – has 4 million cubic metres of storage capacity and includes a 532 MW IGCC plant for electricity generation. Over a thousand people are directly employed across the three production sites. Given its size, workforce and contribution to energy self-sufficiency, ISAB is regarded as a strategic national infrastructure.
The first step will be the completion of the 51 per cent stake acquisition, which will give Ludoil control of Isab. From that point onwards, four key issues will arise.
The first issue has already been highlighted by the Antitrust Authority’s ruling itself: the relationship with Trafigura. Isab is bound until 2033 to the international group – one of the world’s leading traders in commodities and energy – through an exclusive Master Supply and Offtake Agreement. Trafigura supplies crude oil and other raw materials and repurchases around 90 per cent of the refined products, whilst sales to third parties are limited to the remaining 10 per cent.
The AGCM also notes that, even in the absence of the contract, Isab would still require a crude oil supplier, none of which can be found within the Ludoil group, which operates predominantly in the downstream sector. It points out that an early termination of the agreement would have significant financial consequences for Isab. The key issue will therefore be to determine whether the relationship will remain unchanged until 2033, be renegotiated or be gradually replaced.
