The German government has taken temporary control of two subsidiaries of Russian energy giant Rosneft.
The government’s move puts it in charge of Rosneft’s stake in three refineries in the country.
That includes a key facility in the northeast of the country that supplies about 90 percent of Berlin’s fuel, in which Rosneft holds a majority stake.
Germany’s economy ministry said the move was necessary to address an imminent threat to energy security.
In a similar move in April, Germany took control of a subsidiary of Russian gas giant Gazprom.
On Friday, the German government handed over control of the PCK Schwedt refinery in Brandenburg and shares in two other refineries in the south of the country to the national energy regulator.
The Economy Ministry said the move was necessary because key service providers and customers were no longer willing to work with Rosneft, putting the refineries’ continued operations at risk.
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The Schweitzer refinery is the fourth largest refinery in Germany and is a major supplier of gasoline, diesel and jet fuel to Berlin and the surrounding region. Rosneft owns a 54 percent stake in the facility.
Since its construction in the 1960s, the refinery has received all of its crude oil from Russia via the Druzhba pipeline. Parts of western Poland are also supplied by Schwedt.
It was less than a year before Rosneft agreed to buy Shell’s stake in PCK, a move that would have given it more than 90 percent ownership of the important Schweitzer refinery.
That deal was derailed by the war in Ukraine. Now the German government is in control – a symbol of the dramatic changes the conflict has brought to Europe’s energy sector.
In happier times, the refinery would have imported large quantities of crude oil from central Russia via the Druzbha pipeline and delivered refined products to Berlin and Brandenburg.
But since Germany has pledged to boycott Russian oil, new sources of supply will have to be found, even if the pipeline itself is not covered by the upcoming EU embargo.
With Rosneft in charge, this is seen as an impossible task. Berlin feared that the Russian company would simply suspend the plant’s operations instead of using non-Russian oil.
That headache has now been eliminated – although it is not yet clear where the alternative supply will come from.
Rosneft Deutschland, which accounts for about 12 percent of Germany’s oil processing capacity, will be placed under the trusteeship of the Federal Network Agency regulator, which said the former owner no longer has the right to issue directives. The regulator has also gained control of Rosneft subsidiary RN Refining and Marketing.
The German Ministry of Economics said, “With the escrow, threats to the security of the energy supply are addressed and an important cornerstone for the protection and future of the Schwedt site is laid.”
It claims that key suppliers such as insurance companies, IT providers and banks are no longer willing to work with Rosneft, either with the subsidiary itself or through the refinery.
The Federal Network Agency also controls Rosneft Deutschland’s shares in the MiRo refinery in Karlsruhe and the Bayernoil refinery in Vohburg. Rosneft owns 28% and 24%, respectively.
Germany needs to stop importing oil from Russia by the end of the year under European sanctions imposed as a result of Russia’s invasion of Ukraine.
The ministry said Friday’s move includes a package to ensure the Schweitzer refinery can get oil from alternative routes.
It was not immediately clear who could replace Rosneft as operator of the refinery. Shell, which owns a 37.5 percent stake in Schwedt, has been trying to get out.
Germany said this week it would step up lending to energy companies that are at risk of being crushed by soaring gas prices after Russia cut supplies to Europe in retaliation for Western sanctions.
German utility Uniper said Wednesday that the government may hold a controlling stake, saying an earlier state bailout program worth 19 billion euros was no longer enough.
The government also placed SEFE, formerly Gazprom Germania, in trust after Russian energy giant Gazprom gave up in April.