Berlin is considering the possibility of nationalizing Rosneft’s German enterprises

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Berlin is exploring the possibility of nationalizing Russian oil company Rosneft’s assets in Germany as a temporary seizure imposed by the German government following Moscow’s invasion of Ukraine expires.

In response, Moscow criticized the possible nationalization and said it would defend its interests. On Tuesday, Germany’s Economic Ministry told Rosneft that if Russia regains control of the companies, which include Berlin’s main refinery PCK Schwedt, the operations of the plants would be at risk as contract partners would refuse to cooperate, law firm Malmendier Legal said in a statement. , published on LinkedIn.

Preparation for nationalization

Reuters reported on Wednesday that Berlin was preparing for the possible nationalization of Rosneft’s German operations, including its 54.17% stake in the Schwedt refinery, which the German government placed under trusteeship in September 2022 in response to Russia’s invasion of Ukraine. Russian media estimate Rosneft’s assets in Germany at approximately $7 billion.

Germany has extended its bailout program twice, most recently in September 2023, and is due to make a new decision in March when the current program expires.

The same law firm noted that “Rosneft” will take all measures to protect the rights of its shareholders, adding that such expropriation would be an unprecedented measure in Germany and would forever undermine the security of investments in the country. “If a return to Russian control is not in sight at all due to existing state tutelage and the ongoing conflict in Ukraine, then why is expropriation necessary?” – added Malmendier Legal.

Kremlin’s wrath

Kremlin spokesman Dmitry Peskov said that Germany’s plans to expropriate Rosneft shares will have negative consequences and undermine investor confidence and the investment attractiveness of Europe. “This is nothing more than the expropriation of someone else’s property”Peskov said during a daily telephone conference with reporters.

“These are steps that undermine the economic and legal foundations of European states, these are steps that absolutely devalue the investment attractiveness of these countries and have very deep consequences for those who make such decisions,” – he added.

Answering the question whether Russia would expropriate German assets in Russia as a retaliatory measure, he said that Moscow does not rule out any steps to protect its interests. “We do not rule out anything in order to protect our interests and counter the illegal steps we are talking about,” – he said.

“There are no communication channels”

Peskov also said that there are no communication channels with Germany, and “Rosneft” While he is protecting his interests on his own. In December 2023 “Rosneft” filed an appeal to Germany’s Federal Constitutional Court against the German government’s trusteeship of its local subsidiaries, saying a court decision last March upholding the trusteeship violated the constitutional principle of the right to be heard.

The cost of German investments in the Russian Federation

The total value of German investment in Russia for the period from 1991 to 2023 is about $60 billion. This follows from World Bank data, which shows that the accumulated volume foreign direct investment (FDI) from Germany to Russia at the end of 2020 was equal to $49.2 billion. Considering that in 2021 FDI from Germany to Russia grew by 8.5%and in 2022 and 2023 by 10%then we can approximately estimate the total value of German investments in Russia for the entire period.

German investments in Russia distributed across various industries, such as energy, mechanical engineering, chemistry, pharmaceuticals, transport, telecommunications and others. Among the largest German investors in Russia are Siemens, Volkswagen, BASF, Bayer, E.ON, Metro, Bosch and others.

In the event of confiscation of Russian property, German entrepreneurs risk receiving similar countermeasures, as was directly stated in the Kremlin.

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