Trust administration extended
The federal government is not expropriating Rosneft for the time being
March 7, 2024, 5:46 p.m
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The federal government has controlled Rosneft’s German subsidiaries since 2022. Expropriation has long been on the cards, but this could lead to new tensions with Moscow. Instead, the Russian state-owned company should now voluntarily withdraw.
For the time being, the federal government is refraining from expropriating the Russian state-owned company Rosneft’s shares in three German refineries and is instead extending the trust administration for another six months. This was announced by the Ministry of Economic Affairs in Berlin. The aim is for Rosneft to voluntarily sell its shares – in particular the majority in the large refinery PCK in Schwedt, which supplies millions of people in the northeast with gasoline, diesel and kerosene.
Two German subsidiaries of the Russian state-owned company Rosneft own a 54 percent majority in the huge industrial plant in Schwedt. Rosneft also has minority shares in two other refineries in Baden-Württemberg and Bavaria. Overall, the Russian company controls around twelve percent of Germany’s petroleum processing capacity.
“The federal government decided to extend the trust administration again after the Russian owners declared their intention to sell their shares in the two subsidiaries during the extended term,” the ministry said. “A sale would be the most legally secure and therefore also the fastest way to enable investments in the refineries and thus secure the locations.”
The federal government has been in control since 2022
In September 2022, the federal government placed the Rosneft subsidiaries under trusteeship, which has since been extended every six months. Background: The traffic light coalition wanted to stop the import of Russian pipeline oil because of the war in Ukraine, which Rosneft, as the majority owner in Schwedt, would probably not have agreed to. Russian oil is no longer being processed there – the sources of supply have been changed. Some of the crude oil comes by tanker via the port of Rostock, some via the Polish port of Gdansk, and some by pipeline from Kazakhstan.
Since the trust solution was only intended to apply for a limited period of time, the Federal Ministry of Economics threatened to expropriate Rosneft’s shares. Legally this would be possible. However, there were fears of new tensions with Russia and a legal dispute in Germany. According to media reports, the Federal Chancellery and the Federal Ministry of Finance were skeptical.
Instead, Rosneft now reportedly wants to sell the holdings itself. The extension of the trust should allow time to find a buyer. The federal government could probably avoid compensating Rosneft from the state treasury. In any case, the production of gasoline, diesel, etc. will probably continue as before and supplies will be secured. However, for the approximately 1,200 employees at PCK and hundreds more at partner companies, it remains unclear exactly how operations will continue. In addition to the 54 percent of PCK in Schwedt, Rosneft also holds 24 percent of the Miro refinery in Karlsruhe and 28.6 percent of Bayernoil, based in Neustadt an der Donau.
“Energy policy loop”
In the short term, a small pipeline from the port of Rostock to supply oil to Schwedt is actually to be expanded. However, the EU Commission has not yet released the aid of around 400 million euros requested by the federal government. The refinery will likely need billions in investments to prepare for a future with hydrogen production.
The left-wing member of the Bundestag Christian Görke is critical. “This is the next energy policy loop of the traffic light, without it being any further with the ownership structure at PCK after two years of war,” said Görke. “There remains further uncertainty in the region about the future of the refinery and the long-term preservation of jobs.”
If the federal government aims to sell the Rosneft shares to a strategic partner, it would have to be a strong investor who can financially support the change to a green refinery, said Görke. He once again advocated the sale to a Kazakh state-owned company, which, in his view, could deliver more oil to Schwedt and support the switch to hydrogen.