Two subsidiaries of Rosneft, the enormous Russian energy company, are now under temporary German government administration.
The action by the government places it in charge of Rosneft’s holdings in three refineries in the nation. This includes a crucial plant in the northeast of the nation that provides around 90% of Berlin’s gasoline, in which Rosneft maintained a majority share.
According to Germany’s economy minister, the action was required to address a looming threat to energy security. Germany acquired ownership of companies of Russian gas goliath Gazprom in a similar maneuver in April.
The national energy regulator received the management of the PCK Schwedt refinery in Brandenburg and shares in two additional refineries in the nation’s south on Friday from the German government.
According to the economy ministry, the move was required because crucial clients and service suppliers were no longer eager to deal with Rosneft, endangering the refineries’ ability to continue operating.
The Schwedt refinery, the fourth-largest in Germany, is Berlin’s primary gasoline, diesel, and aviation fuel source. Rosneft owns a 54% share in the facility.
Since the Druzhba pipeline was established in the 1960s, the refinery has gotten all of its oil from Russia through it. Schwedt also supplies parts of western Poland.
In less than a year, Rosneft agreed to buy out Shell’s stake in PCK, a move that would have given it more than 90% ownership of the crucial Schwedt refinery.
The conflict in Ukraine ruined that agreement. Now that the German government is in charge, the dispute has dramatically altered Europe’s energy landscape.
In better times, the refinery would pump out refined products for Berlin and Brandenburg after receiving massive amounts of oil from central Russia through the Druzbha pipeline.
But even though the upcoming EU embargo does not include the pipeline itself, it will be necessary to find new sources of supply because Germany has vowed to boycott Russian oil.
That was thought to be an insurmountable feat with Rosneft in charge. Moreover, Berlin was worried that the Russian company might shut down the plant rather than use foreign oil.
Now that headache is gone, albeit it’s unclear where the replacement supplies will come from.
Rosneft, a pawn in a diplomatic war
Since the original 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 now be managed by the Federal Network Agency regulator. In addition, RN Refining and Marketing, a Rosneft subsidiary, was also given to the regulator.
According to the report, crucial vendors like banks, IT businesses, and insurance firms were no longer ready to operate directly with Rosneft’s subsidiaries or through its refineries.
Additionally, the Federal Network Agency has taken over the shares of Rosneft Deutschland in the MiRo refinery in Karlsruhe and the Bayernoil refinery in Vohburg. 28% and 24% of the shares, respectively, are owned by Rosneft.
In accordance with European sanctions put in place as a result of Russia’s invasion of Ukraine, Germany must stop importing Russian oil by the end of the year.
The ministry stated that the action taken on Friday included a package to guarantee that the Schwedt refinery could obtain oil via alternate routes.
Uncertainty exists around the potential successor to Rosneft as a refinery operator. Shell, which holds a 37.5% stake in Schwedt, has long desired to leave.
This week, Germany announced that it would increase lending to energy companies at risk of being wiped out by skyrocketing gas prices after Russia halted supply to Europe in response to Western sanctions.
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German utility Uniper said on Wednesday that a previous state rescue package for €19 billion was no longer adequate and that the government might seize a controlling interest.
In addition, SEFE, formerly known as Gazprom Germania, has been placed under trusteeship by the government after being abandoned by Russian energy giant Gazprom in April.
