PKN Orlen Interested in Controlling Stake in Germany’s Schwedt Refinery

Reuters, September 16, 2022

Polish refiner PKN Orlen is interested in taking a controlling stake in the PCK Schwedt refinery that Germany has placed under a trusteeship, effectively removing control from Russia's Rosneft, sources in Berlin and Warsaw familiar with the matter told Reuters on Friday. Warsaw said earlier this year that ending Russian ownership of the refinery was a condition for potentially supplying it with sea-borne oil via a terminal in Gdansk and via Polish pipelines to replace Russian crude.

State-controlled PKN Orlen declined to comment, saying it announces planned or implemented projects and investments when decisions are made.

"We are monitoring the situation in the region," the refiner's press office said in response to a question from Reuters. Poland's climate ministry and the German economy ministry were not available for comment.

The refinery, which was majority-owned by Rosneft, has been testing Germany's resolve to eliminate imports of oil from Russia by the end of the year under European sanctions to punish Moscow for its invasion of Ukraine.

Germany needs Polish support to supply the refinery via Gdansk. Schwedt also supplies parts of Poland. The landlocked refinery is the source of 90% of Berlin's fuel and has received all its crude from Russia via the Druzhba pipeline since the plant was built in the 1960s. The refinery, brought under state control under Germany's energy security law, can continue to operate but not at full capacity, a spokesperson for the economy ministry said on Friday.

Poland earlier this year offered to allocate capacity at its oil terminal in Gdansk and said it could ship crude oil via its pipelines from the port to Germany on the condition Rosneft was removed as an owner of Schwedt.

"There's a question if Schwedt refinery would adjust to non-Russian crude without losses on production yields but if this is an opportunistic buy it might be worth considering," Michal Kozak, senior equity analyst at Trigon brokerage told Reuters.

(Reporting by Marek Strzelecki and Markus Wacket; Additional reporting Anna Pruchnicka; Editing by Mark Potter and Kirsten Donovan)

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