Germany Signals It Will Stop Russian-Controlled Oil Refinery

(Bloomberg) -- German Economy Minister Robert Habeck signaled a possible change of control at the country’s Schwedt oil refinery that’s run by Russian state-backed producer Rosneft PJSC.

The oil-processing plant, which currently relies on crude piped from Russia, will need to bring in alternative deliveries via the German port of Rostock as it reduces reliance on Russian energy, Habeck said in a video published Wednesday by his ministry. Germany also needs additional support from Poland in securing delivery of oil and that was the reason for Habeck’s visit to Warsaw on Tuesday, he said.

Poland has signaled it won’t agree to having its infrastructure used to supply Schwedt if it means “keeping Rosneft alive,” he said in the video. That’s an indication that Germany may strip control of the refinery from Rosneft. Germany and Poland still have some technical details to resolve before a final deal, he said.

Asked at a news conference later Wednesday whether the government would consider appropriating the Schwedt facility, he said only that all options are on the table: “We are in a situation in which the government must be ready and prepared for all scenarios.”

The Schwedt refinery -- which also supplies western Poland with petroleum products -- poses the biggest challenge in terms of fully weaning Germany off Russian crude because it isn’t in Rosneft’s interest to do so, Habeck said.

One option would be for non-Russian crude supplies to be piped to Schwedt from the port of Gdansk in northern Poland via Plock in the center of the country.

Germany, which is also heavily reliant on Russian coal and natural gas, is currently pushing legislation through parliament that will give the government powers to put critical energy infrastructure under temporary state control. As a last resort, such infrastructure could be appropriated by the state.

“We’re talking about a scenario that would happen if Poland supports Germany and Germany supports Poland for the scenario that Rosneft is no longer the operator of the refinery,” Habeck said. Germany has already taken control of the German unit of Russia’s Gazprom PJSC.

Read more: Germany Eyes Powers to Secure Critical Energy Infrastructure

The ownership of the Schwedt plant has been uncertain for months. Rosneft’s plan to buy a stake in the refinery from Shell Plc hadn’t completed before the war with Ukraine started. Eni SpA is also a shareholder in the site.

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