Shell has announced its agreement to sell its 37.5% stake in the PCK Schwedt oil refinery to Britain’s Prax Group to distance itself from the political tensions surrounding the refinery’s majority owner, Russia’s Rosneft.
The decision to sell the stake comes after the German government placed the local units of Rosneft, which owns 54.17% of the refinery, under trusteeship following Russia’s invasion of Ukraine. While Rosneft remains the legal owner of the stake, it has been stripped of its ability to exert control.
Shell’s move to sell its stake is part of its efforts to reduce its global network of refineries, focusing on core sites that are integrated with its trading hubs and chemical activities. The company expects the deal to close in the first half of 2024, pending regulatory clearance and pre-emption rights by Rosneft and Italy’s Eni, which owns 8.33% of PCK Schwedt.
The buyer, Prax Group, is a privately owned “British multinational, independent global energy conglomerate” that has been actively acquiring assets in 2023. This includes Hurricane Energy, the OIL petrol station network, and a minority stake in a refinery joint venture in South Africa.
Led by CEO Sanjeev Kumar Soosaipillai and executive board member Arani Kumar Soosaipillai, along with their family trusts, Prax reported a core profit (EBITDA) of $147.6 million on sales of $10.5 billion in the year to Feb. 28, 2023. This is a significant increase from the previous year’s figures of $77.2 million and $9.9 billion, respectively.
According to Reuters, the deal marked another key milestone as Prax looks to diversify geographically and enhance our European market presence.
Prax, whose founders started out buying a single petrol station in 1999 when they were in their twenties, did not reply to a request for comment on whether it might also be interested in Rosneft’s stake.
Rosneft, which had previously exercised its pre-emptive right when Shell tried to sell its Schwedt stake to Vienna-based Alcmene in 2021, was not available for comment.
Meanwhile, Malmendier Legal, which is a law firm representing Rosneft’s interests in Germany, stated that Shell is now obligated to inform Rosneft of the pre-emption situation. The firm also mentioned that Rosneft has already expressed interest in the past.
The German Economy Ministry declined to comment on Shell’s move but stated that the sale to Prax is a clear indication that PCK Schwedt was perceived as an interesting company and acted as a stable player on the market. Eni, another potential investor, has not yet commented on whether it will exercise its pre-emptive right.
Notably, in September, Berlin extended the trusteeship of Rosneft’s stake in the refinery due to the lack of progress in negotiations with the Russian oil firm on its exit from Germany’s fourth-largest refinery. At the same time, Poland has been pushing for Germany to force Rosneft out in order to make way for investors like Polish refiner PKN Orlen, which had expressed interest in acquiring the stake.
