The energy company Shell wants to sell its share in the large refinery PCK Schwedt to the British Prax Group. It’s about one of the most important industrial facilities in northeast Germany.
Shell is exiting the PCK Schwedt refinery, which has been placed under political control. As the energy company announced today in Hamburg, the 37.5 percent share is to be transferred to the Prax Group from Great Britain. Shell Germany expects the deal to close in the first half of 2024.
No changes for consumers?
This makes the future of the important industrial facility in northeast Germany, which was previously supplied with Russian oil, a little clearer. The management of PCK, the federal government and the state of Brandenburg viewed the deal as a signal of stability for a company that not only depends on thousands of jobs in eastern Germany, but also supplies the northeast with gasoline, diesel and kerosene. “There is now planning security for the PCK Schwedt,” explained a spokesman for the Ministry of Economic Affairs.
According to media reports, nothing will change for the time being in terms of supplying consumers with gasoline and diesel and the capital airport BER with kerosene as well as the distribution of refined products in northeastern Germany and western Poland. The crude oil for the PCK refinery will continue to arrive via the ports of Rostock and Danzig. Shell – also known in Germany for the gas station network of the same name – had already announced the sale of its shares years ago.
The company justifies this by saying it wants to reduce its “global refining portfolio to core locations that are integrated into Shell’s operational centers.” It is therefore “another important milestone on the way to a focused refinery portfolio and the development of high-quality, integrated locations such as the Energy & Chemicals Park Rheinland,” said Executive Vice President Machteld de Haan.
Deal still subject to change
The Austrian Alcmene Group was actually considered the most likely buyer for a long time. But in 2021 the announced takeover of Shell shares did not take place. The Russian Rosneft group, which owns a good 54 percent of the shares in PCK through two subsidiaries, asserted a right of first refusal. However, following the Russian war of aggression against Ukraine and the change in the oil supply to the refinery, the Rosneft shares are now under trust management by the federal government and are to be sold.
There are also rights of first refusal when selling Shell shares – also for the other Italian minority owner ENI, which owns 8.3 percent of the refinery. Therefore, Shell said the completion of the deal was “subject to the partners’ rights and regulatory approvals.” A purchase price was not mentioned.
The fourth largest refinery in Germany can process up to twelve million tons of crude oil per year. According to PCK, nine out of ten cars in Berlin and Brandenburg run on gasoline and diesel from Schwedt. For decades, the crude oil for this came from Russia via the Druzhba pipeline. The supply was stopped following a decision by the federal government and switched to deliveries of tanker oil and oil from Kazakhstan.
Takeover by the Federal Government required
The British Prax Group is an internationally active oil company and trades in crude oil, petroleum products and biofuels. According to its own information, it has 1,450 employees at eight locations worldwide. However, compared to the British company Shell, which has more than 90,000 employees worldwide and annual sales of $380 billion, Prax is very small.
The company said the transaction is a strategic fit with its recently completed acquisition of the OIL! gas station chain. PCK Schwedt should play a key role in the further expansion of Prax in Europe; the group, founded in 1999, wants to position itself broadly. The refinery will receive new investments through the deal, which is good for the location and the employees.
The allocation of the shares to Prax is also met with criticism. “It can’t be the case that these important shares go to a small British oil trader,” said left-wing politician Christian Görke to the dpa news agency. The company will not be able to carry out the planned conversion into a green refinery for e-fuels and hydrogen because the future concept will cost at least 15 billion euros. The federal government should take over the Shell shares itself and secure the location permanently, demanded Görke.