Germany Seizes Control of Russian Refinery in Midst of Energy Crisis

On Friday, Germany took control of a significant Russian oil refinery, risking reprisal from Moscow in an effort to secure energy supplies and fulfil the European Union’s vow to stop importing Russian oil by the end of the year.

The economy ministry announced that it was taking over the Schwedt refinery of Russian oil company Rosneft, which provides 90% of Berlin’s fuel, and placing it under the trusteeship of the industry regulator.

As they ratchet up sanctions against key supplier Russia for its invasion of Ukraine, governments throughout Europe have been rushing to support their power providers and ensure fuel supply.

Moscow has replied by cutting off gas supplies and threatening to turn off all the taps, which has caused prices to spike and increased the possibility of energy rationing in Europe this winter.

The Federal Network Agency regulator has taken over trusteeship of Rosneft Deutschland, which was mostly held by the Russian oil firm and accounts for around 12% of German oil processing capacity. The regulator declared that the initial owner was no longer able to provide orders.

According to sources in Berlin and Warsaw with knowledge of the situation, Polish refiner PKN Orlen is interested in acquiring a controlling position in the Schwedt refinery, which is the fourth largest in Germany and also feeds areas of western Poland.

For long time, Shell has wanted to sell its 37.5% ownership in Schwedt. The German decision to assume ownership of the refinery, according to Shell on Friday, had “no impact” on the company.

Since the Schwedt refinery receives all of its crude from Russia, it has been a problem for Berlin for a few weeks. However, Germany is determined to stop importing Russian oil by the end of the year due to sanctions imposed by the European Union.

Polish pipelines and a Gdansk oil terminal may be used to supply the refinery with seaborne oil in place of Russian crude, according to earlier statements made by Poland this year.

Without providing further information, the German economy ministry stated that the action taken on Friday included a package to ensure that the refinery could obtain oil via alternate methods.

At 11:30 GMT, Chancellor Olaf Scholz, Economy Minister Robert Habeck, and the state premier of Brandenburg are scheduled to provide more information.

The government announced this week that it would increase lending to businesses at risk of going bankrupt due to skyrocketing gas prices, and power utility Uniper said the state could take a controlling stake, adding that a previous government rescue package worth $19 billion was no longer sufficient.

In addition, after Russian energy giant Gazprom abandoned SEFE in April, the government placed it under trusteeship. SEFE was originally known as Gazprom Germania.

Berlin is struggling to deal with Russia’s decision to stop gas shipments through the Nord Stream 1 pipeline, which had been the main gas supply route supplying the largest economy in Europe.

The Federal Network Agency will acquire Rosneft Deutschland’s stakes in the MiRo refinery in Karlsruhe and the Bayernoil refinery in Vohburg as a result of Friday’s decision.