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Shell’s efforts to sell a stake in an important German refinery suffered their latest setback on Friday after a deal struck a year ago collapsed, leaving the oil major still holding part of a refinery controlled by Russia’s Rosneft.
The Anglo-Dutch company had agreed in December 2023 to sell its 37.5 per cent interest in the PCK Schwedt refinery, near Berlin, to Prax Group, an independent UK company. But the two parties announced on Friday that “after careful consideration” they were not going ahead.
The announcement compounds years of problems for Shell in disposing of its stake in the refinery, which supplies about 90 per cent of the needs of the Berlin area as well as other parts of eastern Germany. A previous effort to sell the stake, in 2021, also fell through.
Shell and Prax gave no reason for the collapse of the deal, which had been due to complete earlier this year. However, there have been reports that Rosneft took legal action to try to prevent the sale.
While Rosneft owns 54 per cent of the refinery, Germany’s federal government seized control of Rosneft’s stake in September 2022 following the imposition of international sanctions against the Russian company.
Germany’s government has stopped short of expropriating Rosneft’s stake in the business, exercising control instead via a “trusteeship” that is extended every six months. The latest extension took place in September and will last until March.
“Both parties have taken the decision not to proceed with the transaction,” Prax and Shell said in a brief joint statement.
Shell previously agreed to sell the stake in PCK Schwedt to Alcmene, part of Austria’s privately held Liwathon Group, but was blocked from completing the transaction by Rosneft, which sought to exercise its pre-emption rights to buy the stake.
Reuters reported in September that, in a case over that dispute, Germany’s federal court had ruled that Alcmene still had the right to buy the stake. Alcmene did not immediately respond to a request to comment on the legal action or whether it still wanted to buy Shell’s stake.
Shell has been seeking to dispose of its stake in the Schwedt facility as part of a strategy to focus on large refineries that are integrated with its chemicals and trading business. Shell does not operate the Schwedt facility.
Prax portrayed the transaction as part of its building of a strong position in Germany.
Shell is expected to continue to try to sell off its stake but gave no indication on Friday of when it might do so or any potential buyers.
