Germany seizes Russian refinery amid energy crisis

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  • German energy industry reeling since war in Ukraine
  • The German regulator now controls the Schwidt refinery
  • The Schwedt refinery is a major fuel source for Berlin
  • PKN interested in taking control of a stake in a refinery – sources

BERLIN (Reuters) – Germany seized a large Russian-owned oil refinery on Friday and risks retaliation from Moscow as Berlin seeks to shore up energy supplies and fulfill the European Union’s commitment to cancel Russian oil imports at the end of the agreement. general.

The Economy Ministry said it would offer a unit of Russian oil company Rosneft (ROSN.MM) Under the tutelage of the industry regulator, the Schwedt commercial refinery was taken over, which supplies 90% of Berlin’s fuel.

“This is a far-reaching energy policy decision to protect our country,” Chancellor Olaf Schultz told a news conference to present the government’s plans to bring the Schweedt refinery under the control of the Federal Network Agency’s regulator.

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Plans included a “package for the future” of more than 1 billion euros ($996.10 million) in federal and state investment over several years in eastern German states, with 825 million euros earmarked for Schweedt alone.

“Russia, as we have known for some time, is no longer a reliable supplier of energy,” Schultz said. We didn’t take this decision lightly but it was inevitable.”

Governments across Europe are racing to support energy providers and secure fuel shipments as sanctions tighten against major supplier Russia over its invasion of Ukraine.

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Moscow responded by cutting gas flows and threatening to turn off all the taps, driving up prices and raising the prospect of energy rationing in Europe this winter.

The Schweidt refinery posed a dilemma for Berlin several weeks ago, as it received all of its crude oil from Russia, but Germany is intent on eliminating oil imports from Russia by the end of the year under EU sanctions.

However, the capture of Schwedt ran the risk of retaliation from Moscow. Schultz said Germany had come up with a possible abrupt halt to crude supplies from Russia, adding: “That’s why we’re prepared.”

A political document released by Berlin on Friday showed that it is in talks with the government of Kazakhstan on securing oil shipments for Schweedt.

Poland said earlier this year that ending Russia’s ownership of the refinery was a condition for its possible supply of seaborne oil through a terminal in Gdansk and through Polish pipelines to replace Russian crude.

Guardianship now

Under Friday’s deal, Rosneft Deutschland, which was majority owned by the Russian oil group and accounts for about 12% of Germany’s oil processing capacity, will be placed under the tutelage of the Federal Network Agency.

The regulator said the original owner no longer had the authority to issue the instructions.

Rosneft Deutschland and Rosneft did not immediately respond to requests for comment.

Polish refiner PKN Orlen (PKN.WA) Interested in acquiring a controlling stake in Schwedt Refinery, Germany’s fourth largest refinery that also supplies parts of western Poland, sources in Berlin and Warsaw familiar with the matter told Reuters. Read more

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Asked about the Polish interest, Schulz replied: “At the moment, we are doing guardianship.”

Shell, which owns a 37.5 percent stake in Schwedt, has wanted to sell that for some time. On Friday, Shell said it was “not affected” by the German move to seize the refinery.

Germany’s move on Rosneft Deutschland is its latest attempt to stabilize the energy market.

The government said this week it would ramp up lending to companies at risk of collapsing due to higher gas prices, and energy company Uniper said the state could take a controlling stake, adding that the government’s 19 billion euro ($19 billion) bailout was not. Longer enough. Read more

The government has also placed SEFE, formerly known as Gazprom Germany, under a trusteeship after Russian energy giant Gazprom. (GAZP.MM) I got rid of it in April.

Berlin is struggling as Russia moves to halt gas flows through the Nord Stream 1 pipeline, which has been the largest gas supply route feeding Europe’s largest economy.

As a result of Friday’s decision, the Federal Network Agency will also take Rosneft Deutschland’s shares in the MiRo refinery in Karlsruhe and Bayernoil refinery in F├╝heburg.

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Additional reporting by Marcus Wackett, Rachel Moore and Miranda Murray in Berlin, Paul Carell in Geneva and Shadia Nasrallah in London; Editing by Edmund Blair, Mark Potter and Louise Heavens

Our criteria: Thomson Reuters Trust Principles.

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