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Rosneft to become Germany's number two refiner after move on Shell stake


Rosneft pre-empts Shell's sale of PCK Schwedt stake

Russian giant already Germany's third-biggest refiner

Shell still owns Germany's biggest refinery

  • Author
  • Robert Perkins
  • Editor
  • Kshitiz Goliya
  • Commodity
  • Agriculture Energy Transition Oil

Russian state oil giant Rosneft has acquired Shell's minority stake in the 230,000 b/d PCK Schwedt refinery in northeastern Germany, boosting its downstream footprint in Europe's biggest economy where it will become the second-biggest refiner.

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Rosneft said Nov. 17 it has exercised its preemption right for a 37.5% share of the Schwedt refinery being sold by Shell, in a move set to increase its shareholding in the plant from 54.17% to 91.67%.

The deal, which is subject to government and regulatory approvals, will see Rosneft's capacity grow by around 86,000 b/d to 344,000 b/d, making the Russian player the second-biggest refiner in the country behind Shell.

Located 120 km northeast of Berlin, the PCK Schwedt refinery is supplied with Russian Urals crude through the major Druzhba oil pipeline.

Rosneft, already the third-largest player in the German refining sector by capacity, has been growing its downstream footprint in Germany over the last decade. On average, Rosneft is responsible for around a quarter of crude oil imports into Germany.

"Increasing the share of PCK refinery is testament to the strategic importance of the German market for Rosneft," Rosneft CEO Igor Sechin said in a statement, "The company builds long-term relationships with its German partners, provides timely and uninterrupted crude supplies, and modernizes key refinery units."

Rosneft already owns a 24% stake in the 310,000 b/d Miro refinery and a 28.57% interest in the 206,000 b/d Bayernoil plants at Neustadt and Vohburg. The Schwedt deal would see its share of Germany's 2 million b/d refining capacity rise from 12% to 17%.

Europe's biggest fuel market, Germany's diesel and gasoline demand are expected to return to pre-pandemic levels of 1.1 million b/d and 500,000 b/d this year, respectively, according to estimates from S&P Global Platts Analytics.

German refining capacity by ownership

Clean fuels push

Shell first announced a deal to sell its stake in Schwedt to a subsidiary of Estonia's privately owned Liwathon Group in July as part of a strategy to reduce its global refining footprint to a number of core, integrated sites. At the time, Shell said Liwathon's Austria-based Alcmene unit would provide energy and commodities trading in Germany from its headquarters in Vienna. Shell estimated that the value of its hydrocarbon inventory at the refinery would range between $150 million and $250 million.

No financial details of the deal were given and Italy's Eni, which holds the remaining 8.33% stake in the plant, also has pre-emption rights.

Shell continues to operate Germany's Rheinland refinery, the country's largest, which processes 327,000 of crude oil and consists of two sites; Wesseling and Godorf. But Shell plans to shut crude processing at the Wesseling site within the Rhineland refining complex in 2025, when Rosneft would become Germany's biggest refiner.

PCK is one of the most technologically complex refineries in Germany, with a Nelson index of 9.8.

Rosneft said it plans to "strengthen the technological leadership of the refinery, including through the implementation of low-carbon projects, considering the current environmental agenda of the EU.

The company is already developing projects aimed at the production of cleaner fuels, such as "green" hydrogen and sustainable aviation fuel. Work in this direction will continue."

Germany's refining assets

Operator Refinery Capacity b/d Ownership
Shell Rhineland 327,000 Shell 100%
Miro Karlsruhe 310,000 Shell (32.25%), ExxonMobil (25%), Rosneft (24%), Phillips 66 (18.75%)
BP Gelsenkirchen 240,000 BP 100%
TotalEnergies Leuna 230,000 TotalEnergies 100%
PCK Schwedt 230,000 Rosneft (91.67%), Eni 8.33%)
Bayernoil Neustadt/Vohburg 206,000 Varo Energy (51.43%), Eni (20%), Rosneft (28.57%),
Gunvor Ingolstadt 110,000 Gunvor 100%
Oilinvest Holborn 105,000 Libya Investment Authority (100%)
BP Lingen 96,000 BP 100%
Klesch Group Heide 90,000 Klesch Group (100%)
OMV Burghausen 76,000 OMV 100%
Total 2,020,000