Like thousands of Sicilians living near Prioro Gargaro, part of the industrial petrochemical hub on the island’s southeast coast, Davide Mauro has tied his livelihood to the giant Russian-owned Lukoil refinery. I was. Gas tanks rise above the vivid turquoise waters of the Ionian Sea.
The future of Italy’s largest refinery has been in question since the European Union agreed to ban most crude oil imports from Russia over its invasion of Ukraine. With less than three months to go before the embargo expires, even when it takes effect on December 5, workers still don’t know if they’ll get a job.
“Officially, the company won’t say anything,” said Mauro, a shift operator who has worked for 20 years at the plant that supplies power to the refinery. There are talks that the Italian government may nationalize the facility or guarantee a new line of credit. Most recently, there was talk of an interested American buyer. Nothing is clear. “
The uncertainty over the Lukoil refinery is that the hard-won, united opposition to Russia’s invasion of Ukraine has spilled over, sometimes unintentionally, across Europe, straining local economies and fueling political tensions. It’s a powerful example of inciting.
Rising fuel and food prices are reducing living standards. European leaders have already warned that rationing, factory closures and blackouts could come this winter. Economic sanctions against Russia have been particularly damaging.
Regions bearing a disproportionate share of the economic burden are found throughout the continent. At Arc, France, the energy-hungry glassworks cannot afford to keep the furnaces running. In Tertre, Belgium, soaring natural gas prices have forced a fertilizer company. Yarra To shutter its operation.
If Lukoil’s site in Prioro shuts down, Mauro said he would have to leave the place where he was born.of Sicilian unemployment rate is almost 19%, one of the highest in the European Union. It’s nearly impossible to find a well-paid job like Mauro’s at Lukoil.
“It’s a nightmare,” he said. “My life is here.”
Lukoil, Russia’s largest private company, was not under sanctions by any country when the Ukraine war began in February. Still, many banks and other financial institutions have decided to avoid doing business with Russian companies after the European Union imposed sanctions. I lost my line of credit.
Prior to the war, the Prioro Refinery, known as ISAB after its previous owner, obtained approximately 40-50% of its oil from Russia. With these other sources now off-limits, the only option was to get all the crude oil from Lukoil.
However, once the European Union’s oil embargo begins, no Russian oil can be imported. Without a fiscal bailout plan to allow the purchase of oil outside Russia, factories face closures and layoffs.
“The impact on the community will be devastating,” said Prioro Mayor Giuseppe Gianni, lighting a small cigar from his office. There was a giant painting of the Madonna and Child in the 1980s, with a pastel-coloured little playground outside the window and an oil refinery in the background.
Mr. Gianni said that the petrochemical complex linked To poison airsaid problems such as water pollution and cancer needed to be resolved, but claimed that refinery closures would hit the region’s economy.
In addition to exporting to other countries, refineries that process more than a fifth of Italy’s crude directly employ about 1,000 workers. Additionally, he has 2,000 contractors working on maintenance and mechanical projects. A further 7,500 people in the region, from truck drivers to seafarers, will be affected by widespread layoffs.
several other energy and petrochemical companies, including Sasol, sona track When Versalis Representatives say their economic futures are linked because the factories produce and buy products from each other and share supply chains with contractors.
“The impact will destabilize the entire industrial area,” said Carmelo Rapisarda, head of the industrial sector at the CGIL trade union in Siracusa, adding that the 35-kilometer industrial hub accounts for half the state’s economy. I added that there is.
The impending oil embargo has suddenly forced the region into a long and simmering crisis. The European Union’s decision to move from fossil fuels to renewable energy sources means that the ISAB refinery and two other refineries on the Sicilian coast will have a limited life.
“Regardless of the war, the situation was already critical,” Lapisalda said.
Last year, the region’s industry association, Confindustria Syracuse, proposed a $3 billion conversion plan to develop new clean facilities that could reduce carbon emissions and generate hydrogen. However, neither the Italian government nor the European Union are reluctant to spend money to support the transition of the oil industry.
Simone Tagliapietra, Senior Fellow at Bruegel, a research group in Brussels, said refineries are important to Italy’s energy security, apart from their economic impact in the region. “They can’t shut down refineries right away,” he said. It is necessary “mainly to ensure the supply of petroleum products to southern Italy” during the transition.
The political climate complicates the search for quick solutions. Mario Draghi’s unity government collapsed in July, and he’s playing an interim role until Sunday’s elections, with polls showing the far-right leader of the Brothers of Italy, Giorgia his Mr. Meloni, leading the way.
Meloni, an avid admirer of Russian President Vladimir V. Putin, recently said he would comply with European Union sanctions and support sending weapons to Ukraine.
Whoever wins the election will inherit the effects of the oil embargo. In the meantime, however, things are urgent. To meet the Dec. 5 deadline to end sea imports, the plant will have to start preparing for shutdown and stop deliveries in November. Various figures, including the outgoing environment minister, nationalization Refinery. The German government last week took control of three refineries owned by Russian oil company Rosneft.
But Claudio Geraci, Vice President of Confindustria Siracusa, dismissed the idea of nationalization as ridiculous. Geraci, deputy general manager for human resources and external relations at the ISAB in Sicily, emphasized that he was only speaking in his capacity as vice president of the trade association. “As ISAB’s manager, I have no comment,” he said. A spokeswoman for Lukoil headquarters in Moscow declined to comment when contacted.
Mr Gerachi said the “only possibility” is for the government to guarantee a line of credit so the company can buy oil from sources other than Russia. But he added that “from the point of view of Confindustria, the situation is difficult”, as the Italian government does not want to be seen as supporting Russian companies.
Local political leaders said there had been interest from potential outside investors. According to union officials, Crossbridge Energy Partnersis a New York-based company that transforms legacy energy infrastructure and recently visited the factory. Crossbridge said it had no comment.
A meaningful and sustainable transformation plan would require significant public investment, says Lucrezia, founder and president of the Ortigia Foundation, which is dedicated to promoting the development of southern Italy and is located about 8 km south of Prioro. Reichlin said.
Reichlin said such an approach makes sense given the region’s significant industrial heritage. But with political uncertainty, she added, “it is doubtful that any government will emerge ambitious enough to take a long-term view of this situation towards the energy transition.”
Reichlin, who is also an economics professor at the London Business School, said the Italian government was likely to resort to the familiar and expensive stopgap measures of public aid for employees who lost their jobs.
For now, workers like Mauro, politicians like Mayor Gianni, and industry leaders like Geráci hope to see a last-minute miracle, while decrying laziness and winging It seems to work with prayer.
“It’s like a bank too big to fail,” Mauro said of refineries and hopes of a rescue. But the exact solution is still vague. “It’s a typical Italian situation,” he added. “I’m pretty sure we only know what’s going to happen at the last minute.”