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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Germany's government has seized control of the subsidiaries of Russian oil major Rosneft to take over its shares in three German oil refineries.
The government's "temporary measure" was taken on the grounds of securing its energy security and was described as "unavoidable" by Federal Chancellor Olaf Scholz, who said Russia was no longer a reliable energy supplier. By taking control of Rosneft's two German subsidiaries, the government will control its stake in the PCK refinery in Schwedt, north-east of Berlin, MiRo in Karlsruhe and Bayernoil in the Bavarian town of Vohburg. Rosneft Deutschland holds a total of around 12% of German oil refining capacity, making it one of the largest oil-processing companies in the country. Germany took control of the subsidiaries of Russia's state-owned gas giant Gazprom in April.
The government said the decision was necessary because business operations at the three refineries were jeopardized as "critical service providers" like suppliers, insurance companies, IT firms and banks, as well as some clients "were no longer willing to work together with Rosneft." PCK Schwedt is the fourth-largest refinery in Germany and supplies 90% of the capital city Berlin's fuel. It is fed by Russian crude via the Druzhba pipeline. In line with the forthcoming European (EU) ban on Russian oil imports from early December, Germany will have to find alternatives for PCK Schwedt. For additional information, see June 6, 2022, article - Europe Agrees to Ban on Russian Oil.
Rosneft stated: "This decision is illegal and, in essence, is an expropriation of equity assets following the situation intentionally created by relevant sanctions of the European Union and actions of German and Polish regulators with the aim of seizing the assets. Rosneft sees this as a violation of all fundamental principles of market economy and civilizational foundations of modern society built on the principle of inviolability of private property."
The government revealed a 1 billion-euro (US$999 million) energy package for eastern German states in the coming years--with Schwedt getting the lion's share of 825 million euro (US$825 million) to ensure that redundancies can be avoided at the plant, which employs more than 1,200 people. Germany, the largest economy in the EU has been hit hardest by Russia's throttling of gas supplies through its Nord Stream 1 pipeline over the summer. Last month, the government was forced to bail out one of its largest gas storage and energy companies, Uniper SE (Dusseldorf, Germany), to the tune of 15 billion euro (US$15.1 billion) due to Russia's strangling of gas supplies into Europe. The government took a 30% stake in the company at the time, but since then credit lines have had to be extended to keep the company afloat. Uniper is now understood to be in talks with the government over a possible nationalization of the company with the government increasing its shareholding to 50%. For additional information, see August 2, 2022, article - Germany Forced to Bail Out Uniper in $15 Billion Deal.
Germany's national fuels association, en2x, agreed with the Rosneft asset seizure. "The decision of the federal government to place Rosneft Deutschland GmbH under trusteeship is understandable for us. It is a prerequisite for a normalization of business activities and creates trust for service providers and customers of Rosneft Germany. Should crude oil deliveries from Russia via the Druzhba pipeline cease for a short time, this would have an impact on supplies to the PCK refinery in Schwedt."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
The government's "temporary measure" was taken on the grounds of securing its energy security and was described as "unavoidable" by Federal Chancellor Olaf Scholz, who said Russia was no longer a reliable energy supplier. By taking control of Rosneft's two German subsidiaries, the government will control its stake in the PCK refinery in Schwedt, north-east of Berlin, MiRo in Karlsruhe and Bayernoil in the Bavarian town of Vohburg. Rosneft Deutschland holds a total of around 12% of German oil refining capacity, making it one of the largest oil-processing companies in the country. Germany took control of the subsidiaries of Russia's state-owned gas giant Gazprom in April.
The government said the decision was necessary because business operations at the three refineries were jeopardized as "critical service providers" like suppliers, insurance companies, IT firms and banks, as well as some clients "were no longer willing to work together with Rosneft." PCK Schwedt is the fourth-largest refinery in Germany and supplies 90% of the capital city Berlin's fuel. It is fed by Russian crude via the Druzhba pipeline. In line with the forthcoming European (EU) ban on Russian oil imports from early December, Germany will have to find alternatives for PCK Schwedt. For additional information, see June 6, 2022, article - Europe Agrees to Ban on Russian Oil.
Rosneft stated: "This decision is illegal and, in essence, is an expropriation of equity assets following the situation intentionally created by relevant sanctions of the European Union and actions of German and Polish regulators with the aim of seizing the assets. Rosneft sees this as a violation of all fundamental principles of market economy and civilizational foundations of modern society built on the principle of inviolability of private property."
The government revealed a 1 billion-euro (US$999 million) energy package for eastern German states in the coming years--with Schwedt getting the lion's share of 825 million euro (US$825 million) to ensure that redundancies can be avoided at the plant, which employs more than 1,200 people. Germany, the largest economy in the EU has been hit hardest by Russia's throttling of gas supplies through its Nord Stream 1 pipeline over the summer. Last month, the government was forced to bail out one of its largest gas storage and energy companies, Uniper SE (Dusseldorf, Germany), to the tune of 15 billion euro (US$15.1 billion) due to Russia's strangling of gas supplies into Europe. The government took a 30% stake in the company at the time, but since then credit lines have had to be extended to keep the company afloat. Uniper is now understood to be in talks with the government over a possible nationalization of the company with the government increasing its shareholding to 50%. For additional information, see August 2, 2022, article - Germany Forced to Bail Out Uniper in $15 Billion Deal.
Germany's national fuels association, en2x, agreed with the Rosneft asset seizure. "The decision of the federal government to place Rosneft Deutschland GmbH under trusteeship is understandable for us. It is a prerequisite for a normalization of business activities and creates trust for service providers and customers of Rosneft Germany. Should crude oil deliveries from Russia via the Druzhba pipeline cease for a short time, this would have an impact on supplies to the PCK refinery in Schwedt."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
