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German court upholds Russian Rosneft subsidiary takeover

March 14, 2023

The court dismissed complaints from the Russian oil giant questioning the legality of the takeover. At the time, Rosneft accounted for some 12% of Germany's oil-refining capacity.

Two cars are checked at the entrance to the PCK refinery in Schwedt, Brandenburg.
The German government ttook over the subsidiaries last SeptemberImage: Annette Riedl/dpa/picture alliance

A German court upheld a decision Tuesday to put two subsidiaries of Russian oil giant Rosneft under German authorities' control, dismissing complaints from the Russian company.

The Federal Administrative Court said that the Economy Ministry's decision to put the Rosneft Deutschland GmbH and Rosneft Refining and Marketing GmbH into the trusteeship of the Federal Network Agency regulator was lawful.

The decision was taken last September, amid growing fear for Germany's energy supply as it aimed to end its reliance on Russia.

What did the court say?

Rosneft's complaints blamed the government for taking over the subsidiaries without a prior hearing. They argued that the action was disproportionate.

The court said that the German government was not obliged to give Rosneft a hearing. It added that indications of a potential capital withdrawal fueled concern for the collapse of the subsidiaries.

The court said that Russia's stake in the subsidiaries frightened business partners including banks and insurers, who planned to pull out.

"The ministry had exercised its discretion according to these standards without error," the court said.

What happened with the takeover?

In September, Chancellor Olaf Scholz officially announced the takeover, saying it was important to do everything possible to ensure Germany's energy security.

He said the decision had not been easy but that it was unavoidable, as Russia was no longer a reliable energy supplier. It was a "far-reaching energy policy decision to protect" the country, the chancellor added.

Federal Chancellor Olaf Scholz, takes part in a press conference on the package of measures for the eastern German refinery sites and ports, alongside Robert Habeck, the Federal Minister for Economic Affairs and Climate Protection to his left, and Dietmar Woidke, the Minister President of Brandenburg, on his right
Chancellor Scholz said the decision was taken to ensure Germany's energy securityImage: Michael Kappeler/dpa/picture alliance

The German government cited the need to ensure continued operations at the oil refineries amid Berlin's resolve to cease oil imports from Russia by the end of the year. European sanctions over Moscow's invasion of Ukraine also contributed to the decision-making process.

Rosneft Deutschland accounted for about 12% of Germany's oil-processing capacity and was one of the largest such companies in the country when the decision was made.

The Russian oil giant has stated that it does not intend to stop importing oil to Germany even though an EU embargo came into effect in February.

rmt/ar (AP, AFP)

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