Shell’s planned sale of Germany’s Rosneft refinery hits a wall

Shell Plc(NYSE:SHEL)’s (NYSE:SHEL) planned sale of a stake in Germany’s Schwedt refinery faces delays due to pending third-party lawsuits, Reuters he reported. Shell’s planned sale of its 37.5% stake in the refinery to British group Prax was expected to close in the first half of 2024; however, the deal hit a snag after Berlin stripped majority owner Rosneft of its control, but not its shares, and placed it under a trusteeship shortly after Russia invaded Ukraine in 2022. The lawsuits include an attempt of Rosneft to prevent the sale to Prax. .

Berlin is seeking to nationalize Rosneft’s German assets, including its 54.17 percent stake in the Schwedt refinery. According to German Economy Minister Robert Habeck, the process of dissolving the trusteeship has started within the government and is currently in the hearing phase. Berlin extended the mandate twice.

Earlier, Poland assured Germany that it could step in and supply the Schwedt refinery with crude oil if oil supplies from Kazakhstan were stopped in possible retaliation for Berlin’s moves against Rosneft. Poland says it is capable of replacing the entire Kazakh volume, about 1-1.2 MMtpy

The three refineries run by Rosneft Germany provide approximately 12% of Germany’s total refining capacity, and Schwedt Refinery near Berlin is the key. This refinery, on the border with Poland, supplies fuel to the Berlin-Brandenburg region. The oil that feeds these refineries comes from the Druzhba pipeline, which previously transported Russian oil to Germany via Ukraine. Refineries were established specifically to refine this oil.

While Russian oil passing through Druzhba was not included in the EU oil embargo, Germany nevertheless stopped importing Russian crude and replaced it with oil from Kazakhstan. Kazakhstan managed to reach an agreement with the Russian energy company Transneft to use the Druzhba pipeline to export oil through Russia and Belarus to Adamowo-Zastawa in Poland.

By Alex Kimani for Oilprice.com

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