Scholz on Rosneft’s disempowerment: “Far-reaching energy policy decision”

The federal government announced in the morning that the majority owners of the PCK refinery – two subsidiaries of the Russian state-owned company Rosneft – would be placed under trusteeship by the Federal Network Agency and thus under state control.

Federal Chancellor Olaf Scholz described the concept for securing the PCK refinery in Brandenburg as a “far-reaching energy policy decision to protect our state”. Russia is no longer a reliable partner, said the SPD politician on Friday. The federal government is doing everything to secure the supply of energy and especially oil.

To secure the production and supply of fuel, heating oil and other products, the federal government takes control of the German subsidiaries of the Russian state-owned company Rosneft. This primarily affects the PCK refinery in Schwedt, Brandenburg, which is important for eastern Germany, but also two other refineries in Baden-Württemberg and Bavaria.

The background is the oil embargo against Russia because of the Ukraine war, which takes effect on January 1st. The federal government has committed itself at EU level to also avoid using Russian pipeline oil. Up to now, PCK has been dependent on it: the refinery has been supplied with Russian oil via the Druzhba pipeline for decades. According to the Ministry of Economic Affairs, the majority owner Rosneft had little interest in turning away from Russian oil.

Now the federal government is relying on a trust solution to take control of Rosneft. The companies Rosneft Germany and RN Refining & Marketing come under the administration of the Federal Network Agency, as the Ministry of Economic Affairs announced. The authority will also take control of the respective shares in the three refineries PCK and Miro in Karlsruhe and Bayernoil near Ingolstadt.

Industrial plants of the PCK refinery in Schwedt.
© REUTERS/Hannibal Hanschke/File Photo

This means that the oil supply for north-eastern Germany is secured, the federal government said – even if Russian supplies fail. “Of course, we have long assumed that the delivery could suddenly fail for reasons related to the Russian war against Ukraine,” said Scholz. “That’s why we are prepared.” The federal government wants to ensure the supply with its own reserves, reserves of the refinery and contracts with Poland.

PCK fears that Russia could quickly take action. “We are preparing for possible short-term restrictions in the Druzhba crude oil supply,” the company said. However, part of the supply is already going through the port of Rostock.

With Brandenburg, Saxony-Anhalt (because of the Leuna refinery) and Mecklenburg-Western Pomerania (because of the ports), the federal government is launching a so-called future package of over one billion euros to preserve jobs and change the location. Investments are planned in a special program of at least 750 million euros over 15 years. The federal government pays half. In addition, 100 million euros from the federal government are to be used for the climate-friendly conversion of the refinery, as well as measures to secure jobs and wages at the PCK site.

Brandenburg’s Prime Minister Dietmar Woidke was pleased because people’s fears would be taken away. But he still expects difficulties. “Unfortunately, we cannot promise that everything will run smoothly and happily in the future.”

A spokeswoman for the Ministry of Economics could not say exactly how high the capacity utilization of the refinery will be. The oil from Rostock ensures a capacity utilization of about 50 percent. Further deliveries are conceivable via the Druzhba pipeline from Kazakhstan and also via Poland.

PCK has around 1200 employees and is an economic pillar of the region around Schwedt. The refinery supplies fuel to much of the Northeast. Rosneft acquired a good 54 percent of the shares through its subsidiaries. The British group Shell is also a partner.

In order to switch to other suppliers, the port infrastructure in Rostock and the pipeline from there to Schwedt are to be expanded. In addition, oil is to be delivered via pipeline from the port of Gdańsk. Habeck said it was clear that Poland would not make a firm commitment as long as potential profits went to Russia via the two Rosneft subsidiaries. “The changes are prepared and talks with the Polish side are well advanced.”

Reactions to the announcements were mostly positive. The industry association “Fuels and Energy” called the decision understandable. The trade union IG BCE supports the decisions. “The employees in Schwedt can breathe easy,” said district manager Rolf Erler. The PCK works council chairwoman Simona Schadow rated the investments by the federal government and the state as “a solid basis for the continued operation of the refinery and the development of the site”.

The coalition partner FDP in the federal government supports the state intervention. The CDU politician Jens Spahn also signaled approval. Criticism came from the left-wing faction’s representative for Eastern Europe, Sören Pellmann, who called the move away from Russian oil hasty.

According to the ministry, Rosneft Germany accounts for around twelve percent of Germany’s oil processing capacity, making it one of the largest oil processing companies. The German subsidiaries import crude oil worth hundreds of millions of euros from Russia to Germany every month. According to the company, the Miro refinery in Karlsruhe is Germany’s largest.

The trusteeship will take effect on Friday and is initially limited to six months. The companies concerned have to bear the costs for this. The network agency can dismiss and reappoint members of the management board and issue instructions to the management board. (dpa)

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Source: Tagesspiegel

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