Germany takes control of Rosneft oil refinery in Berlin

Rosneft

Germany has taken control of a Russian oil refinery owned by Rosneft, risking retaliation from Moscow as Berlin strives to shore up energy supplies and meet its European Union commitment to eliminate Russian oil imports by the end of the year, according to a Reuters report.

Rosneft Deutschland, which was majority owned by the Russian oil group and accounts for about 12% of German oil processing capacity, is being placed under the trusteeship of the Federal Network Agency. The regulator said the original owner no longer had authority to issue instructions.

The economy ministry said it was taking over the Schwedt refinery, which supplies 90% of Berlin’s fuel.

“This is a far-reaching energy policy decision to protect our country,” Chancellor Olaf Scholz told a news conference to present the government’s plans to put the Schwedt refinery under the control of the Federal Network Agency regulator.

The plans included a “package for the future” with more than EUR1 billion in federal and state government investments over several years in eastern German states, with EUR825 million earmarked for Schwedt alone.

Governments across Europe have been racing to prop up their power providers and secure fuel deliveries as they ratchet up sanctions on major supplier Russia over its invasion of Ukraine.

Moscow has retaliated by reducing gas flows and has threatened to shut off all the taps, sending prices soaring and raising the prospect of energy rationing in Europe this winter.

The Schwedt refinery has posed a dilemma for Berlin for several weeks, as it has received all of its crude from Russia, but Germany is resolved to eliminate imports of oil from Russia by the end of the year under European Union sanctions.

Taking over Schwedt, however, risks retaliatory measures from Moscow. Scholz said Germany had gamed out a possible sudden stop in crude supplies from Russia, adding: “That is why we are prepared.”

A policy document released by Berlin also showed that it is in talks with the government of Kazakhstan on securing oil deliveries for Schwedt.

Poland said earlier this year that ending Russian ownership of the refinery was a condition for potentially supplying it with seaborne oil via a terminal in Gdansk and via Polish pipelines to replace Russian crude.

Polish refiner PKN Orlen says it is interested in taking a controlling stake in the Schwedt refinery, which is Germany’s fourth-largest and also supplies parts of western Poland.

Shell , which owns a 37.5% stake in Schwedt, has wanted to sell that for some time.

Germany’s move on Rosneft Deutschland is its latest attempt to stabilise the energy market.

The government has also put SEFE, formerly known as Gazprom Germania, under trusteeship after Russian energy giant Gazprom ditched it in April.

Berlin is grappling with Russia’s move to halt flows of gas through the Nord Stream 1 pipeline, which had been the biggest gas supply route powering Europe’s biggest economy.

The Federal Network Agency will also take Rosneft Deutschland’s shares in the MiRo refinery in Karlsruhe and Bayernoil refinery in Vohburg.