Germany Seizes Assets Of Russian Oil Giant Rosneft
Europe’s largest economy is pressing ahead with an historic overhaul of the energy system to prevent shortages this winter.
(Bloomberg) -- Germany seized the local unit of Russian oil major Rosneft PJSC as Berlin moves to take sweeping control of its energy industry, secure supplies and sever decades of deep dependence on Moscow for fuel.
Alongside its move for the Rosneft unit, Chancellor Olaf Scholz’s administration is in advanced talks to take over Uniper SE and two other major gas importers, Bloomberg reported on Thursday. Europe’s largest economy is pressing ahead with an historic overhaul of the energy system to prevent shortages this winter.
A decision on the next moves could come within days. The need for action is urgent with Uniper losing 100 million euros ($99.7 million) a day as it tries to replace Russian gas to maintain deliveries to local utilities and manufacturers.
“Over the next few months, we’ll have to continue to preserve critical infrastructure in order to achieve energy independence,” said Verena Hubertz, a leading lawmaker for Scholz’s Social Democrats. “Further measures will follow.”
Read more: Germany Working on Historic Takeover of Three Gas Companies
Germany has been particularly hard hit by the economic standoff with the Kremlin because of its reliance on Russian gas and oil. Sanctions and Moscow’s efforts to punish Europe economically for its support of Ukraine risk tipping Germany into recession. Its energy sector is reeling from the squeeze on supplies, and government bailouts are quickly being dwarfed by the scale of the crisis.
On Friday, the government announced it was taking over Rosneft’s German unit, including stakes in three oil refineries. The move also affects holdings in France, Italy and Austria, highlighting how interconnected Europe’s energy system is.
Scholz’s administration pulled the trigger on the seizure after months of talks. Because of sanctions related to the war in Ukraine, Germany is preparing to stop buying Russian crude by the end of the year and needed to make sure Kremlin involvement in its key refineries didn’t become a threat to supplies.
Read more: Germany’s Rosneft Seizure Kicks Off Test of Oil Infrastructure
The swoop for the Rosneft unit is an escalation of the economic standoff with Russia as Berlin unwinds decades of tight collaboration. One of the most critical assets in the deal is the Schwedt refinery near the Polish border, which supplies Berlin and much of eastern Germany with fuel.
The facility has, until now, got its crude via the Druzhba pipeline from Russia. As long as the plant remained significantly in Russian hands, it was hard to see how the facility would keep going.
The German Economy Ministry said the move “counteracts the impending threat to the security of energy supply and lays an important foundation for the preservation and future of the Schwedt location.”
The refinery is now preparing for potential retaliation from Russia, such as short-term restrictions in the crude supplied via the Cold War-era Druzhba link, the operator PCK Raffinerie GmbH said in a statement.
Grid regulator BNetzA will become trustee of Rosneft Deutschland GmbH and RN Refining & Marketing GmbH, which account for around 12% of Germany’s oil-processing capacity, through stakes in refineries in Schwedt, Karlsruhe and Vohburg. The process is similar to the takeover of Gazprom Germania earlier this year.
Germany has the power to takeover the administration of an energy company by issuing an order through the German Energy Safety Act.
The trusteeship runs until March 15, 2023, but could be renewed. Rosneft can challenge the order in German courts.
Scholz and Economy Minister Robert Habeck will present more details on the nationalization plan at a news conference in Berlin later Friday. The government has declined to comment on any plans to nationalize the gas companies.
(Updates with additional details on the deal and lawmaker comment)
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