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Shell has struck a deal to sell its stake in a German refinery co-owned with Russia’s Rosneft as it continues to cut ties with Moscow and reshape its refining portfolio.
The FTSE 100 oil and gas giant is selling its 37.5 per cent stake in the PCK refinery in Schwedt, north-east Germany to the London-based oil supply conglomerate Prax Group.
The Schwedt refinery is 54.17 per cent owned by Russia’s state-owned oil company Rosneft, although the German government took control of that stake last year to try to shore up energy supplies following Russia’s invasion of Ukraine.
The refinery supplies roughly 90 per cent of Berlin’s oil demand and was supplied with crude from Russia until Germany stopped importing Russian oil in January 2023 in response to the war.
The refinery, which is able to process about 12mn tonnes per year, is now supplied by Kazakhstan as well as seaborne imports through the ports of Rostock, Germany and Gdansk, Poland.
Shell said the sale was part of the company’s strategy to cut down its global refining portfolio and focus on large sites integrated with its chemicals and trading businesses.
“This is another important milestone,” said Machteld de Haan, executive vice-president for chemicals and products at Shell.
The company also announced in March 2022 that it would “withdraw from its involvement in all Russian hydrocarbons” including exiting its service stations and other operations in Russia.
It has since withdrawn from the Sakhalin-2 liquefied natural gas project in Russia’s far east as well as the Salym oilfield project in Western Siberia, saying it no longer has any joint ventures with Russia’s state-owned Gazprom in Russia. It sold its service stations in the country to Lukoil in May 2022.
Neither party gave a value for the deal, which is expected to close in the first half of next year, pending regulatory approval and partner rights. The third shareholder in PCK is Eni, which owns 8.33 per cent.
Prax Group is trying to enlarge into Europe after rising to prominence in the UK with its purchase of the Lindsey Oil Refinery in North Lincolnshire, England from Total in 2020.
In November, it bought Germany-based Mabanaft’s petrol retailer Oil! Tankstellen, which has 340 sites in Germany and neighbouring countries.
Sanjeev Kumar Soosaipillai, chair and chief executive of the Prax Group, said the purchase of the Schwedt refinery “provides us with a solid platform in the heartland of Europe from which to continue our expansion strategy”.
The PCK refinery came online in 1964, quickly establishing itself as core to the region’s economy and essential to large consumers such as Berlin’s international airport.
