Berlin’s fuel snafu may outlast Putin’s threats

Eni SpA

27/04/2026 10:56

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Pierre Briancon

BERLIN, April 27 (Reuters Breakingviews) - The interruption of Kazakh oil flowing through Russia to a key German refinery has raised the spectre of yet another sneaky ploy of Russian president Vladimir Putin to punish Europe. But this should only be a secondary concern to Berlin commuters worrying about their ability to drive their diesel-fuel SUVs in the six-lane highways that criss-cross the city. The main problem of the Schwedt refinery - which provides 90% of the German capital city’s needs in petroleum products - is that it is stuck in an ownership limbo triggered by the government's incomplete nationalisation four years ago.

The massive refinery situated 140 kilometers north of the German capital once only processed Russia’s Urals crude oil transported through the Druzhba (“Friendship”) pipeline. It is still legally owned by Russian oil giant Rosneft ROSN.MM, but the German government took over the facility after Russia’s invasion of Ukraine in 2022. Schwedt was placed in trusteeship, and not fully nationalised, because of Berlin’s fears that Putin might retaliate by expropriating Russian assets of German companies. Russian oil is no longer refined in Schwedt, but Germany struck a deal with Kazakhstan in December 2022 to keep crude flowing through the same pipeline.

Kazakh officials have hinted that the pipeline interruption may owe more to Ukraine’s effectiveness in crippling Russian oil facilities than to any ploy from the Russian leader. In that case it should not be lasting. But even if it were, the 1.2 million tons of Kazakh oil processed annually only account for less than 20% of Schwedt’s output. Berlin truckers and drivers may not be affected much in the short term.

Of higher concern is the strategic paralysis of the company operating the refinery. Rosneft controls a 54% stake in the facility, Shell SHEL.L another 37.5% and Italy’s ENI ENI.MI a little over 8%. Shell has tried in vain to offload its stake as buyers worry about the legal uncertainty. And Rosneft for now has shown no interest in selling out, sticking to the stance that Germany is violating property rights and international treaties.

The refinery is now processing oil coming from the sea ports of Rostock and Gdansk, but needs sizeable investments to adapt its equipment and processes. The government has pledged no less than 400 million euros so far, but the plan is yet to be approved by the EU.

Controlling the pipeline without property rights cannot be a lasting solution. Without investments, the refinery's capacity utlisation - currently at only 80% - will keep declining as it fails to adjust to the new types of crude oil it processes, different from Russia's Urals variety.

At some point Germany may have to properly expropriate Rosneft and seek a buyer for the stake. That would not be the end of legal uncertainty: The Russian group is under U.S. sanctions and would not be able to receive the money from the sale. But that would at least become a matter for governments to argue about, allowing Schwedt to operate like a proper company.

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CONTEXT NEWS

Russia's Deputy ‌Prime Minister Alexander Novak said on April 22 that the supply of Kazakh crude oil via the Druzhba pipeline to Germany would stop from May 1, forcing a major refinery near Berlin to make up the shortfall from elsewhere.The move deals a blow to the PCK Schwedt refinery, which supplies most of the fuel of Germany's capital city. The facility is majority-owned by Rosneft, Russia's largest oil group, but was taken over in trusteeship by the German government in 2022, shortly after the invasion of Ukraine.

Germany stopped importing Russian oil in the last three years https://www.reuters.com/graphics/BRV-BRV/akveyjkngvr/chart.png

(Editing by Neil Unmack; Production by Shrabani Chakraborty)

((For previous columns by the author, Reuters customers can click on BRIANCON/pierre.briancon@thomsonreuters.com))