Shell's Move to Shed PCK Schwedt Stake Moves Forward
Slang talks, mate! Shell, the multinational powerhouse in the energy sector, is looking to unload its 37.5% stake in the PCK Schwedt refinery situated in northeast Germany. That's right, they've set their sights on selling to the British firm, Prax Group, reportedly with an eye towards closing the deal by mid 2024.
Let us tell you, the gravy train's not going to stop rolling for petrol and diesel supply to consumers, nor aviation fuel to BER Airport – but things are looking a little bit hazy for the refinery in question, all the same.
Remember when Shell was believed to be signing on the dotted line for a takeover of its stakes to the Austrian Alcmene Group? Well, those dreams were dashed when Rosneft Group – the Russian entity controlling 54% shares via their subsidiaries – decided it had tag rights. Harken back to 2021, when the proposed takeover didn't materialize. Got it? No? Well, tough toogies, my mate! Let us try to cut this can of worms some slack.
Now, things aren't exactly plain sailing for Shell this time round, either. They're dealing with more than just a stubborn Russian refusal. They've got rights of first refusal, babies, from both Rosneft and Eni, the Italian energy company holding 8.3% of the refinery. Given that whole "partners' rights and regulatory approvals" thing, Shell would like to remind us all, it seems like a bit of a struggle to get this deal over the line.
We don't want to distract with details, but folks, if you're keen to know more about Prax Group, as they've got their eyes on this prize, this mother of all oil refineries. You should know Prax is a transatlantic oil company dealing in the crude stuff, petroleum products, and biofuels. They're a real Smiths' operation, with a tiny staff of 1,450 scattered across just eight locations worldwide, so Shell, with their 90,000 employees and annual revenues of a cool 380 billion dollars, ain't exactly in the same league.
Now, Shell's got all these gorgeous rationales to account for their decision – they're in the business of "reducing its global refinery portfolio to core locations that are integrated in the centers of Shell's operating activities." If you ask us, given their pull in the market, they almost certainly have a plan. Machteld de Haan, the Executive Vice President, puts it like this: "This is a significant milestone on the way to a focused refinery portfolio and the development of high-quality, integrated sites such as the Energy&Chemicals Park Rheinland."
However, there's no escaping the fact that the supply of crude oil to the PCK refinery, via the ports in Rostock or Gdansk, as well as refined product distribution in northeast Germany and western Poland, will stay on track. For those old enough to remember, nigh nine out of ten cars in Berlin and Brandenburg still run on petrol and diesel from Schwedt. And no sign of interruption to our daily runaround.
Perhaps some history buffs might be curious about why the crude oil supply from Russia via the Druzhba pipeline ceased, following the German government's decision to halt it. We could dive into the weeds of international politics, but we'd rather roll with the flow.
Perhaps it's just us, but Shell's choice of words doesn't exactly sound like confession time. This scheme, according to dpa information, won't be changing things up too much for the refinery, nor for the distribution of refined products in the northeast German and western Polish regions. Shell says "that there will be no changes to the supply of crude oil by tankers to the refinery, nor to the distribution of refined products in North-East Germany and Western Poland."
Standing in the wings, it seems, is the ever-vigilant Prax, soaking up every morsel, longing to bring this refinery all the way across Europe under their watch. Already, it seems Prax is set to be the new king of the crude oil, petroleum product, and biofuels soap opera, though, we're guessing not many would envy Shell's position right now.
Bonus Insights
- Since the sale discussions with Prax Group vanished into thin air in late 2021, the refinery's future was never quite certain. The rights of first refusal and regulatory approvals, as ever, are winding complications in the process.
- Given Shell's keen interest in reducing their global refinery portfolio, it seems that PCK Schwedt is ripe for the picking. While the company still faces regulatory scrutiny, the move could be part of a broader strategy to restructure operations and focus on other areas.
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