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Russia’s Rosneft warned that any move to nationalise its assets in Germany would “damage the safety of investment forever”, after Berlin told the oil company it was considering the step to bolster its energy security.
In a statement, Rosneft’s law firm Malmendier Legal said such an expropriation would be “unprecedented in Germany’s post-war history” and that the Kremlin-controlled company would take “all necessary measures” to protect the rights of its shareholders.
Sources close to the German economy ministry confirmed that it was considering expropriating Rosneft’s assets, though no decision had yet been taken.
The move would mark the latest stage of the west’s crackdown on Russian assets in retaliation for Russia’s full-scale invasion of Ukraine in February 2022.
In the past few months, western nations have been actively exploring ways to use the roughly $300bn in Russian central bank assets frozen after the invasion to fund Ukraine, as Republican resistance in Washington threatens the flow of financial support to Kyiv.
The EU, however, is wary of pursuing such a path, and is instead looking at ways to skim off profits generated for financial institutions such as Euroclear, where €191bn in Russian sovereign assets are held.
Germany has been among the European countries that have expressed concerns over the implications of seizing assets belonging to a sovereign state, which under international law has immunity.
Rosneft’s main asset in Germany is its 54.17 per cent stake in PCK, a refinery in the north-eastern town of Schwedt. The plant accounts for 95 per cent of Berlin and neighbouring Brandenburg’s fuel demand. It makes up about 10 per cent of Germany’s total output of fuels.
Schwedt’s long-term fate has been unclear ever since the German government seized control of three Rosneft-owned refineries in September 2022, including PCK, and placed them under the trusteeship of the country’s federal energy regulator, the BNA.
The aim of the move was to safeguard PCK’s future ahead of an EU embargo on Russian oil imports that went into force in January 2023 and deprived the refinery of its main source of crude.
The German government has since then raced to diversify Schwedt’s supply of crude, for example by tapping oil from Kazakhstan. The refinery is now being fed by pipelines from Rostock, and Gdansk in Poland.
Malmendier Legal said that the economy ministry had informed it on Tuesday this week that it was considering expropriating shares in Rosneft Deutschland GmbH and RN Refining & Marketing GmbH.
A spokeswoman for Germany’s economy ministry said the government’s “overriding objective was to safeguard security of supply and to ensure that Rosneft Deutschland and PCK Schwedt, as well as the MiRO and Bayernoil refineries [the other two German plants owned by Rosneft], continue to operate reliably and permanently”.
A source close to the ministry has said the BNA’s trusteeship over Rosneft’s assets in Germany runs out on March 10, and the refineries won’t be able to fulfil their supply obligations “without follow-on action by the state”.
For that reason, the person said, the government was “considering the possibility of expropriating Rosneft Deutschland”. Hearings were under way on the issue.
The move would not be the first time that Germany has nationalised Russian assets. In November 2022 the government transferred Gazprom’s local subsidiary into federal ownership, in a move it said was designed to safeguard the country’s gas supply. But an expropriation of the Rosneft-owned refineries would be on a larger scale than anything attempted by a western government until now.
Kremlin spokesman Dmitry Peskov condemned the German plans on Thursday, saying they were nothing other than the “expropriation of someone else’s property”.
“These are steps that undermine the economic and legal foundations of European states, these are steps that absolutely devalue the investment attractiveness of these countries and have very deep consequences for those who make such decisions,” he said.
