Germany seizes oil refineries belonging to Rosneft

Image Source: Bloomberg

Two subsidiaries of Rosneft, a prominent Russian energy company, are now under the temporary management of Germany.

The government now controls Rosneft’s ownership interests in three refineries nationwide as a result of the action. This includes a significant facility in the northeast of the nation that supplies around 90% of Berlin’s fuel and in which Rosneft maintained a majority share.

According to Germany’s economy ministry, the action was required to address a looming threat to the country’s energy security. German businesses of Russian gas goliath Gazprom were taken over in a similar maneuver in April.

In addition to shares in two additional refineries in the country’s south, the German government on Friday transferred control of the PCK Schwedt refinery in Brandenburg to the national energy regulator.

According to the economy ministry, Rosneft’s ability to continue operating the refineries was threatened by the fact that key customers and service suppliers were no longer ready to cooperate with it.

Germany’s fourth-largest refinery, Schwedt, serves as Berlin and the surrounding area’s primary source of gasoline, diesel, and aviation fuel. In the facility, Rosneft has 54% ownership.

Since the Druzhba pipeline was established in the 1960s, the refinery has only ever gotten its oil from Russia. Schwedt also supplies west Polish regions.

A little more than a year has passed since Rosneft decided to purchase Shell’s stake in PCK, allowing it to gain more than 90% ownership of the crucial Schwedt refinery.

That accord failed due to the conflict in Ukraine. Instead, the battle has forced significant reforms on Europe’s energy sector, which are now being represented by the German government’s authority.

In better times, the refinery would transport large amounts of crude oil from central Russia via the Druzbha pipeline and produce refined goods for Berlin and Brandenburg.

However, even though the upcoming EU embargo does not apply to the pipeline directly because Germany has vowed to boycott Russian oil, new sources of supply will need to be identified.

That was viewed as an impossibility under Rosneft’s leadership. In Berlin, there were worries that the Russian company would decide to stop operating the plant altogether rather than using oil from another country.

Although it is now unclear where the replacement supply will come from, that headache has now been eliminated.

Rosneft caught in the crossfires

Due to the Federal Network Agency regulator’s determination that the former owner no longer had the power to give orders, Rosneft Deutschland, which makes up about 12% of the capacity for oil processing in Germany, will be managed by a trustee. In addition, a Rosneft subsidiary, RN Refining and Marketing was also given to the regulator.

Insuring firms, IT service providers, and banks, among other crucial suppliers, allegedly no longer wanted to operate directly with Rosneft through its subsidiaries or its refineries.

Also taken over by the Federal Network Agency are Rosneft Deutschland’s holdings in the MiRo refinery in Karlsruhe and the Bayernoil refinery in Vohburg. 28% and 24%, respectively, of the stakes, are owned by Rosneft.

Following European sanctions put in place as a result of Russia’s invasion of Ukraine, Germany must cease importing Russian oil by the end of the year.

According to the ministry, the action taken on Friday included a package to guarantee that the Schwedt refinery could obtain oil via alternate methods.

Who might take over as a refinery operator in place of Rosneft is uncertain. The 37.5% shareholder Shell has long desired to leave Schwedt.

After Russia reduced supply to Europe in retaliation for Western sanctions, Germany announced this week that it would increase loans to energy companies at risk of being wiped out by skyrocketing gas prices.

Read Also: Germany looking for new ways to save energy 

According to German utility Uniper, an earlier state rescue package costing €19 billion was no longer sufficient, and the government might assume a controlling stake.

As a result of Russian energy giant Gazprom abandoning SEFE in April, the government has also placed it under trusteeship, previously known as Gazprom Germania.

Opinions expressed by San Francisco Post contributors are their own.

Anthony Carter

I’m Anthony and I finished my degree graduate studies on Public Administration and I spend most of my free time in contributing written works about community development, public administration and lifestyle.

Leave a Reply

Your email address will not be published.