Page 11 - FSUOGM Week 12 2022

FSUOGM POLICY FSUOGM

Germany reviews Rosneft refinery deal

GERMANY GERMANY has put Russian oil producer Ros- acquisitions were considered against the public
neft’s purchase of an extra 37.5% stake in the interest. But the economy ministry did not com-
Germany is cutting ties PCK Schwedt oil refinery under review against ment on the exact reasons for the review.
with Russian energy. the backdrop of Russia’s invasion of Ukraine, the Germany’s cartel office had approved the
German economy ministry reported on March 21. stake purchase on February 21, just three days
Rosneft agreed in November last year to buy before Moscow began its invasion.
the share in the 230,000 barrel per day (bpd) PCK Schwedt is one of the most technolog-
refinery in Germany’s north-east from Shell, bol- ically complex refineries in Germany, with a
stering its equity interest in the facility to 91.7%. Nelson index of 9.8. Rosneft has been striving
The deal would raise Rosneft’s overall refining to expand its refining interests in Germany
capacity in Germany by 86,000 bpd to 344,000 and elsewhere in Europe, in order to lock in
bpd, establishing it as the second-largest refiner demand for its oil. The Schwedt refinery is fed
in the country after Shell. with Russian oil via the Druzhba oil pipeline
However, in the wake of Moscow’s invasion of system.
Ukraine, Germany is cutting its energy ties with Rosneft is headed by powerful Kremlin ally
Russia, having put the Nord Stream 2 project on Igor Sechin, often referred to as Russian Presi-
hold and pledged support for LNG terminals to dent Vladimir Putin’s right-hand man. Sechin,
help wean itself off Russian gas. who has known the Russian leader since the
“Concerning the takeover of additional shares early 1990s, when they both worked in the St
in the PCK refinery by Rosneft, an investment Petersburg mayor’s office, has been placed under
review process has been launched,” the German EU and UK sanctions in response to Russian
economy ministry said in a statement to Reuters. actions in Ukraine. He has been on the US sanc-
Germany has launched such reviews in tions blacklist since 2014, after Moscow’s annex-
the past, when proposed investments and ation of Ukraine’s Crimea peninsula. ™

Russia mulls oil tax tweaks

RUSSIA THE Russian government is weighing up some volumes for the domestic market.
whether to make changes to taxation in order “President Putin has stated that difficulties
The move could to reduce domestic oil and oil product prices – a exporting goods should mean lower prices
put further strain on move that could potentially cause further diffi- internally for Russian consumers,” analysts at
Russian oil exports. culties for exporters. BCS Global Markets said in a research note.
Russian oil exporters are having significant “However, much of the price of gasoline and
problems shifting their products onto export diesel at the pump is made up of excise taxes.
markets as a result of Western sanctions and Additionally, the government is at least thinking
buyers shunning them because of the political about halting the final tax manoeuvre, which
situation. Under the so-called tax manoeuvre, was to eliminate the export duty by 2024, which
oil export duties in Russia are due to be reduced would put further upwards pressure on domes-
from 15% this year to 10% in 2023 and 5% in tic product prices.”
2024, before being phased out completely. BCS GM said Russia’s oil companies were fac-
However, the government is considering ing logistical challenges with exports, and while
cancelling the tax manoeuvre because of high it expects them to be solved in a few months, the
domestic prices, or maintaining the current level large discount of Urals to other benchmarks is
of export duty for longer, Deputy Prime Minister likely to remain. Urals typically trades at a $2 per
Alexander Novatek said at a meeting at the State barrel discount to Brent, but that discount has
Duma on March 21. expanded to $30 per barrel in recent weeks. BCS
“If there is a need for this, then we can, and I GM sees tax adjustments as likely.
have already called for an analysis of all the pros “Given the geopolitical crisis, Russian oil
and cons,” Novak said. “This must be approached companies are facing significant problems
very carefully, because there may on the one exporting crude and refined products,” BCS GM
hand be budget losses, and on the other hand, said. “Although there are willing buyers, gener-
we will return to the topic of subsidies.” ally speaking, for Russian oil, especially in Asia,
He stressed that “neither the Ministry of Finance arranging the shipping and payment has become
nor the oil companies expressed a desire to return to extremely challenging.”
the old scheme.” In return for reduced export duty, The International Energy Agency (IEA) has
oil refiners in Russia signed investment agreements estimated that as much as 3mn barrels per day
to modernise their facilities to be more efficient, (bpd) of oil and oil products will be unable to be
produce higher quality fuels while setting aside exported in April because of these challenges. ™

Week 12 23•March•2022 www. NEWSBASE .com P11