In the distance, Rosneft's giant oil refinery in Schwedt, Germany, on May 13, 2022.Katrin Streicher/The New York Times News Service
The German government is taking control of three Russian-owned oil refineries in Germany – part of a series of interventions as it secures energy supplies ahead of a European ban on Russian crude imports.
The move is designed to ensure the continued operation of subsidiaries of the Russian oil giant Rosneft in Germany to secure the production and supply of gasoline, heating oil and other products. The most important is the PCK refinery in Schwedt along with two other refineries in the south.
Both Rosneft Deutschland and RN Refining & Marketing will come under the administration of the Federal Network Agency – an independent federal authority based in Bonn, according to the Federal Ministry for Economic Affairs and Climate Action.
The refineries provide around 12 per cent of the country’s crude oil processing capacity, making Rosneft Deutschland one of the largest oil-processing companies in Germany, the economy ministry said in a statement.
German Chancellor Olaf Scholz said securing production at the PCK refinery was a “far-reaching energy policy decision to protect our country.” Russia, he said, was no longer a reliable partner. The German subsidiaries of Rosneft imported hundreds of millions of euros worth of crude oil from Russia to Germany every month.
Russian state oil company Rosneft has accused the German government of a “forced expropriation” of its German subsidiaries. In a statement Friday evening in Moscow, the company spoke of an “illegal” seizure of its assets and announced that it would take legal action against Berlin’s action to protect its assets.
At the same time, Rosneft made it clear that the federal government’s decision meant that it was no longer able to “guarantee the industrial and environmental safety of the plant.” However, the company was also prepared to negotiate a possible new contract – on condition that there was a guarantee for the payment of oil deliveries, for the investments and for the rights of the company’s employees.
Europe’s oil embargo against Russia because of its war against Ukraine will take effect on Jan. 1. In the meantime, the PCK refinery can still obtain Russian oil via the Druzhba pipeline.
Germany has been looking for alternative oil suppliers for months and has been in contact with the Polish government about possible deliveries via the port of Gdansk, Susanne Ungrad, a spokesperson for the Federal Ministry for Economic Affairs and Climate Action said. But the Polish government didn‘t want to deliver oil to a Russian-owned refinery.
“Germany needs the support of the Polish government to organize the transport of the oil via Gdansk. The German government‘s overtake of Rosneft Deutschland must now be seen in this context,” energy expert Steffen Bukold, head of the research and consulting company EnergyComment, told The Globe.
To prepare the refinery for crude oil from countries other than Russia, the facilities will need to be adjusted. If the measures were to be undertaken in the winter, when the oil embargo starts, “it would have been too late,” Mr. Bukold said
About 50 per cent of the Schwedt refinery’s capacity can now be supplied via pipeline from the German port of Rostock. “This can start immediately, already now there were deliveries of non-Russian oil in the last months that worked well. And already now non-Russian oil is arriving steadily,” Ms. Ungrad said. Oil currently comes from the United States or Libya, for example.
In addition, the oil storage facilities in Schwedt and Leuna are full and can be used for a few days without any deliveries, Ms. Ungrad added. Oil from the national oil reserve can be scheduled via transports.
Officials at the PCK refinery fear Russia could quickly retaliate. “We are preparing for possible, short-term restrictions in Druzhba crude oil supply,“ the company said.
Russia is already squeezing gas supplies to Europe, crippling the economy in retaliation for the continent’s support of Ukraine.
The gas cut-off through the Nord Stream 1 pipeline is continuing. Federal Network Agency spokesperson Ulrike Platz confirmed: “Since September 1, no more Russian pipeline gas has been coming to Germany. No gas is imported from Russia either via Nord Stream 1 or via Poland.“
That aggravates the already tense situation of German company Uniper SE and two other gas importers. The government is also working on a plan to take them over.
Russia‘s energy minister announced on Friday that the Nord Stream 2 will be “replaced“ by an alternative gas pipeline to China as the strategic project has failed to make headway because of Western sanctions on Moscow.
Alexander Novak made the announcement in an interview with Russian television channel Rossiya-1 on Thursday, responding with a resounding “Yes“ to a question on whether Moscow would replace the European Nord Stream 2 with the Asian Force Siberia 2 amid the conflict in Ukraine.