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It seems that from the point of view of the Schwedt refinery itself, a business such as Orlen would be a good partner – it is a large, serious, stable company embedded in the industry. In Germany, however, the Chancellor’s office and partly the Ministry of Finance are hesitant. There are voices, for example, advocating against escalating the situation with the Russians – says Michał Kędzierski from the Centre for Eastern Studies (OSW) in an interview with BiznesAlert.pl.
Greenpeace activists at the Schwedt refinery in Germany. Source: Greenpeace / Twitter
- Germany may want to settle the dispute over the Schwedt refinery with the Russians amicably. “The Germans would take some risks. The Russians may not fulfill their part of the contract and only simulate the sale of shares, play for time. Representatives of the German government had already complained about this attitude in previous months, when for the first time Rosneft was probed about its willingness to voluntarily divest,” says Michał Kędzierski from OSW.
- “If a Kazakh company were to take over these shares, it would be in their natural interest to use their own oil sent through the Russian oil pipeline system. If Germany agreed to such a scenario, it would take a number of risks. For example, when it comes to transit,” warns the interviewee.
- “It seems that from the point of view of the Schwedt refinery itself, a business such as Orlen would be a good partner – it is a large, serious, stable company embedded in the industry. In Germany, however, there are doubts,” our interlocutor assesses.
BiznesAlert.pl: Will the German government extend the trusteeship or move towards the derussification of the PCK refinery in Schwedt?
Michał Kędzierski: Given recent media reports that Rosneft has told Berlin to divest its assets in Germany and has withdrawn a complaint to the German Federal Administrative Court against the establishment of a board of trustees, a decision to extend the board for another six months seems increasingly likely. This would mean the scenario described by Handelsblatt in mid February could come true. The paper wrote about a meeting in Stambul between officials from the Chancellor’s office and the economy ministry with Igor Sechin, the CEO of Rosneft. According to the German newspaper, it was then when the parties allegedly agreed that Germany would suspend work on the expropriation and extend the board of trustees for six months and allow the Russians to dispose of their assets in Germany during this time, and Rosneft, in turn, will withdraw the complaint. Taking into account the latest reports, which fit into this scenario, it can be assumed that by March 10, a decision will be made on the extension of the trusteeship.
This means Germans would take some risks. The Russians may not fulfill their part of the contract and only simulate the sale of shares, play for time. The German government had already complained about this attitude in previous months, when for the first time the possibility of voluntary divestment from Rosneft of its assets in Germany was probed. On the other hand, after the extension of the board of trustees, Germany will still be able to resume the expropriation procedure.
Does this mean that the Russians will suggest who should enter and who should not enter the Schwedt refinery? Considering this, would Poles be able to take over their shares?
If the scenario described above comes true, the Russians will choose a partner and agree on the details. Although the decision will have to be approved by Berlin, it will be Rosneft holding the cards. It is unlikely that the Russians will sell their shares to the Poles. It seems that the most convenient partner for the Russians in this context would be the Kazakh company Kazmunaigas, which currently sells oil to the Schwedt refinery through the Russian pipeline system running through Belarus and Poland and has already been mentioned as a potential candidate for taking over the shares in the plant. With such a choice, the Russians would retain control over the transfer of Kazakh oil to Germany, as well as transit revenues.
It is worth noting that the PCK refinery in Schwedt is not Rosneft’s only asset in Germany. The Russians also have stakes in two other refineries. I think it’s going to be hard for them to find one buyer for the whole thing. Separate transactions with different partners are likely.
Can this be an excuse to prolong the process indefinitely? One could look for such a company without the intention of finding it.
This is a risk the Germans would take on themselves. It seems that Germany wants to solve this issue in the coming months. In September, very important elections will be held in the eastern states, including in Brandenburg, where the Schwedt refinery is located. It is such an economically important plant and a large employer in the region that its fate resonates politically and has long been a leading topic in the regional media. Uncertainty about the future of the refinery is already fueling pro-Russian parties, especially the AfD. The current government of Brandenburg want to quickly resolve the issue of Russian shares in order to ensure stability in the region. At the same time, the Prime Minister of the state Dietmar Woidke called for the refinery to be nationalized and left in the hands of the state for a long time and not to sell it further, for example, to Poles.
The Polish factor appears in unofficial information. Does the current media coverage reduce the chance of Poles entering Schwedt?
It’s hard to tell. It is true that there is information that we discussed at the beginning, but it is not yet a decision. The Russians have made some moves that are currently being analyzed in Berlin. The implementation of the previously discussed scenario, that is, the extension of the board of trustees and the possibility of letting the Russians sell the shares, would mean that the chances of their acquisition by Polish companies would be slim.
The Schwedt refinery could receive all the fuel through the naftoport. However, the Poles expect derusification first. Is it possible to meet in the middle so that a Kazakh company collects non-Russian oil through the Polish naftoport?
Such a situation cannot be ruled out, but it seems to be a tipping point. If a Kazakh company were to take over these shares, it would be in their natural interest to use their own oil sent through the Russian oil pipeline system. If Germany agreed to such a scenario, it would take a number of risks. For example, on the issue of transit. In the event of a political escalation, the Russians could block the flow of oil through their territory. Another question is to what extent the Polish side will be ready to cooperate. If a Polish company were to join PCK Schwedt, the Polish authorities would naturally be more interested in ensuring that the refinery operates in a stable manner. It seems that from the point of view of the Schwedt refinery itself, an entity such as Orlen would be a good partner – it is a large, serious, stable and embedded company in the industry.
In Germany, however, the Chancellor’s office and partly the Ministry of Finance are hesitant. There are voices, for example, urging not to escalate the situation with the Russians, who have promised severe retaliatory measures in the event of expropriation. There would also be the issue of multi-billion dollar compensation, which the finance minister is reluctant to consider during the budget crisis. Therefore, part of the German government on the issue of Russian assets prefers to seek an amicable solution, that is, a voluntary sale. From their perspective, the most important thing is that the Russians will eventually disappear from the German energy infrastructure. The only question is how to achieve it.
Interview by Wojciech Jakóbik
