Energy Economy

Germany Seizes 3 Russian Oil Refineries

The German government has taken control of three oil refineries operating in Germany and owned by Russian oil giant Rosneft in an effort to forestall potential damage to its economy from the European Union’s embargo on Russian oil. The embargo is set to go into effect on January 1.

Under terms of a law amended last month, three refineries will be placed under temporary trusteeship but could be expropriated as a last resort. Rosneft accounts for about 12% of Germany’s oil refining capacity and one of the refineries, PCK in the town of Schwedt, is located right on the Druzhba (Friendship) pipeline, a 2,500-mile-long pipeline that, in January, transported about 750,000 barrels of crude oil per day to the European Union.

The EU embargo means that the continent will have to replace the pipeline oil with oil supplied by tankers. IHS Markit estimated that ports in Gdansk, Poland, and Rostock, Germany, could deliver about 740,000 barrels a day.

The Druzhba pipeline network supplies Poland, Germany, Czechia, Hungary and Slovakia with about 25% of the countries’ daily demand for crude oil. In addition to deliveries through the ports of Gdansk and Rostock, pipeline systems on the Adriatic Sea could ramp up.

The Adria crude oil pipeline system, starting at the Omisalj terminal in Croatia, can transport 480,000 barrels, if the barrels can be transported by tanker. That amount would support refineries in Croatia, Serbia, Hungary and Slovakia.

The Transalpine pipeline system carries about 930,000 barrels a day from a terminal in Trieste to refineries in Hungary, Austria and Bavaria. The problems to be solved here are redirecting tankers from the Middle East carrying spot market barrels to Asia and getting more crude from West Africa. Both can be mostly solved with cash.

Rosneft Deutschland owns a 54% stake in the Schwedt refinery and Shell owns 37.5%, a stake the company has been trying to sell for some time, according to Reuters. Rosneft Deutschland is being placed under the trusteeship of the Federal Network Agency, which has said that Rosneft no longer has authority to issue instructions.

Sponsored: Tips for Investing

A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.