Germany seizes assets of Russian oil giant Rosneft

(Bloomberg) — Germany has seized the domestic unit of Russian oil producer Rosneft PJSC as Berlin tries to take full control of the energy industry, secure supplies and break decades of deep dependence on Moscow for fuel.

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In the latest move, the government said it was taking over Rosneft’s German arm, including stakes in three oil refineries. As Germany prepares to stop buying Russian crude until the end of the year due to sanctions, it must find alternative sources and ensure that Russian ownership of its key refineries does not become a threat to supplies.

Germany has been particularly hard hit by the economic standoff with the Kremlin due to its dependence on Russian gas and oil. Sanctions and Moscow’s efforts to punish Europe economically for its support for Ukraine risk tipping the region’s largest economy into recession. Its energy sector is reeling from shrinking supplies, and government bailouts are quickly being overwhelmed by the scale of the crisis.

Alongside its crackdown on Rosneft, Chancellor Olaf Scholz’s government is in advanced talks to take over Uniper SE and two other major gas importers to avoid a collapse of its energy system, Bloomberg reported on Thursday. A decision could come within days. The need for action is urgent as Uniper is losing €100 million a day as it tries to replace Russian gas with more expensive alternatives.

“Things are complicated, we are working on them very carefully,” Economy Minister Robert Habek said Thursday.

Read more: Germany working on historic acquisition of three gas companies

The takeover of the Rosneft unit is an escalation of the economic standoff with Russia as Berlin dissolves decades of close cooperation. The Schwedt refinery – near the Polish border – has until now received its crude oil through the Druzhba pipeline from Russia. While the plant remained largely in Russian hands, it was hard to see how the facility would continue to receive enough fuel to supply Berlin and other parts of East Germany.

The government said the move “counteracts the looming threat to the security of energy supplies and lays an important foundation for the preservation and future of the Schwedt location,” the Economy Ministry said.

Network regulator BNetzA will become trustee of RN Refining & Marketing GmbH and Rosneft Deutschland GmbH, which account for around 12% of Germany’s oil refining capacity, through stakes in oil refineries in Schwed, Karlsruhe and Faubourg. This is a similar scheme to the acquisition of Gazprom Germania earlier this year.

Germany has the power to take over an energy company by issuing an order through the German Energy Security Act. The order, issued by the Ministry of Economy, expires in six months, but can simply be renewed.

Rosneft may challenge the order in German courts.

Scholz and Habeck will present more details of the nationalization plan at a press conference in Berlin later on Friday, it added. The government declined to comment on any plans to nationalize the gas companies.

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