Former Eni SpA CEO Paolo Scaroni promised Italian unions he wouldn’t shut the company’s money-losing oil refineries until 2014. Now the new boss looks ready to wield the ax.

Eni has begun negotiations to close as much as half its 774,000 bpd capacity and put more than 3,500 jobs at risk, according to the industry’s main union, which started a strike at one plant on July 15. Eni’s biggest program of closures would be a radical attempt by new CEO Claudio Descalzi to deal with overcapacity in Europe’s refining sector, where the region’s economic slump and competition from Asia has forced shutdowns and caused bankruptcies.

Descalzi, who headed the profitable exploration and production unit before his promotion in May, will probably get backing, at least tacitly, from his largest shareholder: the Italian government. While closing the plants would cause job losses as unemployment stands at 12.6%, Prime Minister Matteo Renzi supports change at state-backed companies and has sought to weaken union power within his Democratic Party.

“Renzi’s message to make companies more efficient is very clear,” said Nicolo Sartori, an energy analyst at Rome’s Institute for International Affairs. “If Eni wants to cut costs and tackle inefficiencies, probably Descalzi will touch” the refining part of the business.

An Eni official declined to comment on any potential closures, saying a new strategic plan that includes the refining and marketing unit will be stated on July 31.

Workers are striking at Eni’s Gela plant in Sicily, Filctem-CGIL’s regional secretary-general, Giuseppe D’Aquila, said by phone. Gela may not get a 700 million-euro ($950 million) upgrade, unions said after meeting Descalzi in Rome last week.

Closing the plants would cut Eni’s Italian workforce by about 13%, based on data in the company’s fact book.

“Eni’s new CEO may emerge as a male Italian version of Margaret Thatcher by going up against the unions,” analysts at Sanford C. Bernstein & Co. led by Oswald Clint, said in a note. While investors thought plant closures could never happen, “Italian press suggests such a plan is brewing and being discussed with unions, which is remarkable.”

Thatcher’s government sought to reduce union power in the UK during the 1980s, forcing through a program of coal-mine closures in the face of a year-long strike.

European refiners have struggled to turn a profit as recession curbed demand for fuel, more efficient plants opened in Asia and the Middle East and the boom in U.S. oil production closed a major export market. That led to more than a dozen plants shutting, the biggest wave of closures since the 1980s.

The now-bankrupt Petroplus Holdings closed sites across the region after struggling to find buyers, while France’s Total accepted union demands, promising not to shut any sites until next year.

Refining margins are likely to remain weak for the next one to two years, Fitch Ratings said in a July 8 note. The agency may downgrade Eni from its A+ rating if its restructuring efforts aren’t successful, it said.

“Refining closures are not a ‘should we’ but a ‘we must’ given declining Italian demand and consistent earnings losses,” Clint wrote. “Eni’s decision to close the refineries is bold but necessary.”

Eni told the union at least three of its six refineries were at risk of closing, according to a statement from the labor union last week. It guaranteed continued operations at the 190,000 barrel-a-day Sannazzaro refinery, which got a new diesel-producing unit in 2012, and at Milazzo, a joint venture with Kuwait Petroleum Corp., according to the statement. The two plants represent half of its capacity in the country.

The company said at the meeting it won’t go ahead with investment at Gela, while the Taranto facility, the second stage of the Venice plant conversion, and the chemicals site at Priolo were at risk. The Livorno refinery, with a capacity of 84,000 barrels a day, wasn’t mentioned in the statement.

Eni is 30% owned by the state, giving the prime minister power to appoint the CEO. Renzi, Italy’s youngest-ever premier and an advocate of labor-market deregulation, picked a fight with CGIL union leader Susanna Camusso to win party backing for a tax cut for low income workers.

“The unions have to understand the music has changed,” Renzi said in a television interview earlier this year.

Eni’s refining and marketing division’s loss deepened to 159 million euros ($215.75 million) in the first quarter from 51 million euros ($69.20 million) a year earlier. Eni said April 29 it saw “continuing weak conditions” and that it would persist with measures including cost cuts, renegotiation of long-term gas-supply contracts, and capacity restructuring to help support its mid and downstream businesses.

European refining margins averaged $3.30 a barrel in the first half of 2014, according to Fitch. That compares with $4 a barrel in 2013 and $6.80 a barrel in 2012. Total consumption of fuels in Italy fell 6% in May from a year earlier, according to data by the Ministry of Economic Development.

Eni’s six refineries process 774,000 barrels of oil a day, according to data compiled by Bloomberg. That’s about half of Italy’s total capacity. Eni had an agreement with the labor union not to shut Italian refineries permanently until this year, Scaroni said in 2012.