Germany takes control of Russian-owned refinery

PCK Schwedt oil refinery in Schwedt, Germany on Monday, May 9, 2022.

Krisztian Bocsi | Bloomberg | Getty Images

The German subsidiary of Russian oil giant Rosneft was placed under administration on Friday, giving Germany’s federal regulator control of the PCK refinery in Schwedt, a key source of fuel for the city of Berlin.

Rosneft Deutschland, which was previously majority-owned by Rosneft, has been testing Germany’s resolve to eliminate imports of oil from Russia by the end of the year under European sanctions to punish Moscow for its invasion of Ukraine.

“With the trusteeship, the threat to the security of energy supply is countered and an important foundation stone is laid for the preservation and future of the Schwedt area,” the German Economy Ministry said in a statement.

Rosneft Deutschland accounts for about 12% of Germany’s oil processing capacity and is one of the largest oil refiners in the country, the ministry said.

Friday’s move escalates already tense relations with Russia, despite Chancellor Olaf Scholz and Russian President Vladimir Putin discussing the situation in Ukraine in a phone call on Tuesday.

German government sources had said ahead of the announcement that a potential immediate halt to Russian oil supplies would have to be factored into a decision to place Rosneft Deutschland under receivership.

The landlocked Schwedt refinery is Germany’s fourth largest and supplies 90% of the capital’s fuel and has received all its crude oil from Russia via the Druzhba pipeline since the facility was built in the 1960s.

Parts of western Poland are also supplied by Schwedt, as is Berlin-Brandenburg Airport.

Friday’s move is accompanied by a “comprehensive package” designed to ensure oil can be delivered to the refinery via alternative routes, the ministry said.

It is unclear who may step in to replace Rosneft as operator of the refinery. The British oil major Shell, which owns 37.5% of the shares in Schwedt, has wanted to withdraw for some time.

Verbio and Enertrag, both from the renewable energy sector, have expressed interest.

With the administration, the Federal Network Agency regulator also takes over Rosneft Deutschland’s shares in the MiRo and Bayernoil refineries in Karlsruhe and Vohburg, respectively.

Chancellor Scholz, Minister of Economy Robert Habeck and Brandenburg’s Prime Minister will reveal details of the package at 1130 GMT.

The government’s move to put Rosneft Deutschland in the hands of the Federal Network Agency follows a similar move by Berlin with SEFE, formerly known as Gazprom Germania, coming under administration after Gazprom dropped it in April.

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