German Government Takes Over Subsidiary of Russian Oil Giant Rosneft

Germany has taken over the subsidiary of the Russian oil giant Rosneft to ensure control over its refinery in Schwedt, a key supply source for Berlin. Rosneft Deutschland tested Germany’s resolve to halt oil imports from Russia by the end of the year as part of European sanctions against Moscow due to its invasion of Ukraine.

The government decided to cut this supply route, entrusting the management of its refineries in Schwedt, Karlsruhe, and Vohburg to the domestic energy regulator.

– With ownership, the threat to energy security is also removed, and a cornerstone is laid for the preservation and future of the Schwedt site – stated the Ministry of Economy.

Rosneft Deutschland accounts for about 12 percent of Germany’s oil refining capacity and is among the largest oil processors in the country, the ministry announced. The Schwedt refinery has no access to the sea, is the fourth largest in Germany, and meets 90 percent of Berlin’s fuel demand. Since its construction in the 1960s, it has sourced oil exclusively from Russia via the Druzhba pipeline.

Schwedt also supplies derivatives to parts of western Poland and Berlin-Brandenburg Airport. It is unclear who will replace Rosneft, the majority owner. The British oil company Shell owns a 37.5 percent stake in Schwedt, but has been looking to withdraw for some time.

On Friday, they announced that the German government’s decision does not affect them, adding that they will ‘continue to fulfill their contractual obligations in accordance with their shares’.  

– We do not want to speculate on measures regarding the ongoing operation of the Schwedt refinery (or other locations) that the government may implement – they stated in an email to Reuters. 

Interest in Rosneft’s subsidiary has been expressed by German companies Verbio and Enertrag, both from the renewable energy sector. Sources in the German government said before the announcement of the decision that the takeover of Rosneft Deutschland could result in an immediate halt to the supply of Russian oil.

The decision is part of a ‘comprehensive package’, which is intended to ensure the delivery of oil to the refinery via alternative routes, the ministry announced. Chancellor Scholz, Minister of Economy Robert Habeck, and the Prime Minister of Brandenburg will announce the details of the package during the day.