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Two subsidiaries of Rosneft, the world’s largest energy company, are now temporarily under the management of the German government.
The government now possesses Rosneft’s shares in three refineries nationwide thanks to this move. This includes a crucial plant in the northeast of the nation, where Rosneft maintained a majority share and which supplies almost 90% of Berlin’s gasoline.
According to Germany’s economy minister, the action was required to address an emerging threat to energy security. Germany exercised comparable control over companies of Russian gas monopoly Gazprom in April.
On Friday, the national energy regulator received the management of the PCK Schwedt refinery in Brandenburg and stakes in two additional refineries in the country’s south from the German government.
According to the economy ministry, the decision 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, serves as Berlin’s primary gasoline, diesel, and aviation fuel source. Rosneft owns a 54% share in the facility.
Since the Druzhba pipeline was constructed in the 1960s, the refinery has gotten all of its crude from Russia through it. Additionally, Schwedt serves some of western Poland.
Less than a year ago, Rosneft decided to purchase Shell’s stake in PCK, giving it more than 90% ownership of the crucial Schwedt refinery.
The Ukraine War destroyed that contract. Now that the German government is in charge, the dispute has drastically 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 via the Druzbha pipeline.
However, even though the upcoming EU embargo does not affect the pipeline itself, it will be necessary to find new sources of supplies because Germany has vowed to boycott Russian oil.
That was regarded as being an impossible assignment with Rosneft in charge. Moreover, Berlin was worried that the Russian company might simply shut down the plant rather than utilize foreign oil.
That headache is now gone, but it’s still unclear where the replacement supplies will come from.
Rosneft is caught in a web of sanctions
Rosneft Deutschland, which makes up roughly 12% of the capacity for processing oil in Germany, will be managed by the Federal Network Agency regulator because it was determined that the previous owner no longer had the power to make decisions. Additionally, the regulator was given command over Rosneft’s RN Refining and Marketing subsidiary.
According to the report, crucial suppliers like banks, IT businesses, and insurance firms were no longer ready to operate directly with Rosneft’s subsidiaries or through its refineries.
The shares of Rosneft Deutschland in the MiRo refinery in Karlsruhe and the Bayernoil refinery in Vohburg have also been taken over by the Federal Network Agency. Rosneft owns both 28% and 24% of the shares.
According to European sanctions put in place because Russia invaded Ukraine, Germany must stop 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.
Uncertainty exists around a potential successor to Rosneft as a refinery operator. Shell, which holds a 37.5% share in Schwedt, has long desired to leave the company.
In response to Russia cutting supplies 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.
German utility Uniper said on Wednesday that an earlier state rescue package for 19 billion euros was no longer adequate and that the government might seize a controlling interest.
In addition, the government has placed SEFE, formerly known as Gazprom Germania, under trusteeship after Russian energy giant Gazprom abandoned it in April.