FSUOGM: Rosneft's legal attempt to block Shell refinery sale in Germany fails

A German court has rejected a complaint by Rosneft against Shell’s move to sell its stake in Germany’s 220,000 barrel per day (bpd) Schwedt oil refinery, Reuters reported last week.

Rosneft challenged the planned sale at the higher regional court in Duesseldorf. Shell intends to divest its 37.5% stake in the plant to the UK’s Prax Group. But Rosneft remains the majority owner of the refinery, even though its stake was placed under trusteeship by the German government in 2022.

Rosneft argued that the ownership agreement at the refinery gives existing shareholders the right of first refusal to purchase the stake in Schwedt. Prax joining the project also puts at risk the sale of Rosneft’s 54.2% interest, the Russian oil firm claimed. Germany’s government has given Rosneft until March next year to secure a buyer, otherwise its stake could be nationalised.

In its ruling, the court said Rosneft’s complaint was without legal grounds. It said the company was obliged to agree to the sale as long as Shell had offered the stake to other shareholders first, noting that Rosneft had declined to buy in writing. The buyer’s suitability in Rosneft’s view has no bearing on its obligation to consent to the transfer.

Shell has made on-and-off attempts to divest its position at Schwedt for almost a decade, in line with a broader trend of leading international oil companies (IOCs) scaling back in European refining to focus on higher-margin projects elsewhere, namely in the upstream sectors. In December last year Shell announced it had signed a deal with Prax, as part of a broader push to reduce its refining operations to only core plants that are integrated with its trading hubs and chemicals business.

The divestment was meant to be completed in the first half of this year. While Shell’s interest was valued at €155-190mn ($172-211mn), it was assigned a negative value of about €14mn, Reuters reported in September, citing sources and the sale document. Reportedly, Shell also held talks on a sale to Qatar.

Rosneft’s lawyer in Germany Bertrand Malmendier disagreed with the court ruling and said his client would consider all legal avenues, including making an appeal at the Federal Court of Justice.

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