Germany takes over three refineries amid energy crisis

Berlin has taken over three Russian-controlled refineries in Germany to diversify its energy supply and reduce further its exposure to any future Russian moves to cut off supplies.

The German government said on Friday it had enacted emergency powers to place the PCK Schwedt refinery, 100km northeast of Berlin, under state trusteeship – effectively seizing it from Russia’s state-controlled Rosneft.

This refinery supplies Berlin with 90 per cent of its petrol and diesel and, with two others in southern Germany, have now been given new directors and an additional €800 million investment capital.

“The trustee management structure will counter the threat to the security of energy supply,” said Robert Habeck, federal economics and energy minister, calling the move an effort to “secure the facilities and guarantee their security”.

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In recent months, he said, many critical service providers and customers were no longer willing to work with Rosneft.

The decision affects crude oil importers Rosneft Deutschland (RDG) and RN Refining & Marketing GmbH, which account for about 12 per cent of oil refining capacity in the country. Before the war in Ukraine Germany drew 35 per cent of its crude oil from Russia.

At a joint press conference, Chancellor Olaf Scholz said the intervention would keep the refinery operational and avoid redundancies among the 1,200 staff.

Dietmar Woidke, state premier in Brandenburg, where the Schwedt refinery is located, welcomed the decision after months of uncertainty in the region. “It was not our decision to take this decision,” he said, “it was because of the decision of the Russian president to start a war of aggression in the middle of Europe.”

Last year Rosneft agreed to buy out the refineries co-owner Shell, giving it 90 per cent control, though the deal has been frozen since Russia invaded Ukraine.

For more than half a century the Schwedt refinery has processed Russian crude via the Druzhba (Friendship) pipeline. With a looming EU embargo on Russian oil imports by year-end, however, Berlin feared Rosneft would cease supplying crude oil entirely, mirroring the shutdown of Russian gas supplies through the Nord Stream 1 pipeline.

The first main challenge for the new refinery directors will be to secure alternative sources of crude oil for Germany. A key supply hub for ship deliveries will be Gdansk, 400km to the east in neighbouring Poland.

Earlier this year Poland promised Germany spare capacity at its oil terminal in Gdansk. It also offered to ship crude oil via Polish pipelines to Germany, but only if Rosneft was removed as an owner of the Schwedt refinery.

Polish energy giant Orlen is said to be interested in taking control of the Schwedt refinery, but Mr Scholz insisted the plant – still legally part-owned by Rosneft – would remain under temporary German trusteeship. This leaves it under the ultimate control of the federal network agency responsible for all of Germany’s energy and telecommunication links.

Friday’s move is the latest effort by Berlin to reduce its dependency on Russian energy. In April it established a trusteeship for a German subsidiary of Russian state-owned company Gazprom.

Berlin is also facing growing pressure to nationalise, or take a controlling stake in struggling energy supplier Uniper. Uniper is locked in an existential struggle to buy enough gas on spot markets, at astronomical prices, to meet its contractual obligations. It accepted €19 billion in state aid last May, in exchange for giving the German state a 30 per cent stake. With that money now reportedly exhausted, talks are under way now to take full control from Uniper’s majority owner, Finnish state-controlled energy utility Fortum.

With Uniper now said to be losing €130 million daily, Finnish officials said on Friday they would not accept the nationalisation of the German company without adequate compensation.