Shell sells its 37.5 percent stake in the PCK Schwedt refinery in eastern Germany to the British Prax Group, as announced by the company on Friday. The decision follows an uncertain future for the refinery, which is one of the most important industrial facilities in Northeast Germany and has been heavily affected by the Russia sanctions, as it was previously supplied with Russian oil. The sale to Prax, seen as a signal of stability for the company, has been positively evaluated by the management of PCK, the federal government, and the state of Brandenburg.
Thousands of jobs and the supply of petrol, diesel, and kerosene in the region depend on the refinery. However, there are no changes expected for consumers, as the supply of crude oil and distribution of fuel are planned to continue as usual, according to dpa information. Nevertheless, there are critical voices questioning the sale to a small British oil trader like Prax, as they doubt whether they can handle the planned conversion to a green refinery for e-fuels and hydrogen. Left party politician and PCK expert Christian Görke therefore demands that the federal government takes over the Shell shares and secures the location in the long term.
The Prehistory of the Sale is Complex. Shell has been planning to sell its shares for years in order to focus on a few locations. The Austrian Alcmene Group was considered the most likely buyer for a long time, but was outbid by the Russian state-owned company Rosneft in early 2021. This preemptive right failed in mid-2022 when Russia attacked Ukraine and the European Union responded with sanctions. This was a significant change for PCK, as the refinery had primarily processed Russian crude oil from the Druzhba pipeline since the 1960s. The German government had decided for political reasons to end the dependence on Russian oil, and the federal government took control of the majority of the company as a trustee. Now, PCK sources crude oil through the ports of Rostock and Gdansk, as well as oil from Kazakhstan transported via the Druzhba pipeline.
The British Prax Group, which trades internationally in crude oil, petroleum products, and biofuels, has approximately 1,450 employees in eight locations worldwide. However, compared to the British company Shell, which employs 90,000 people and has an annual revenue of $380 billion, Prax is relatively small. In a statement, Prax emphasized its strategic interest in establishing a presence in the EU and stated that they will support the refinery's activities during the upcoming energy transition and create new investment opportunities in the region.
The announcement of the sale was well received in Schwedt, although many questions are still unanswered. PCK CEO Ralf Schairer stated that the sale provides clarity and planning security, while the works council emphasized the importance of the buyer's interest in site and job security. The Federal Ministry of Economics and the state of Brandenburg also expressed their positive views on the deal. The Federal Ministry stressed that this means planning security for PCK, and Brandenburg's Minister of Economy Jörg Steinbach (SPD) highlighted that Prax not only has experience in the field of petroleum but also operates hydrogen projects. He sees a positive development for Schwedt.
The completion of the transaction is expected for the first half of 2024, subject to the rights of the partners and regulatory approvals. Both Rosneft, Russia's largest oil company, which owns just over 54 percent of PCK through two subsidiaries, and minority shareholder Eni, who owns 8.3 percent, have a preemption right. However, it remains unclear what will happen with Rosneft's shares and what the government plans to do with the shares in the medium term, as it only manages them instead of owning them.
The situation remains unchanged until March 2024. Shell's stock traded slightly lower at 25.19 pounds in London on Friday.
