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BERLIN: Germany is struggling to find a way to wrest control of a Russian-owned refinery that supplies most of Berlin’s fuel, four people close to the matter said, fearing retaliation by Moscow if the site is nationalised and as Western firms hesitate to step in.

The PCK refinery in Schwedt, majority-owned by Russian oil giant Rosneft, is testing Germany’s resolve to eliminate imports of oil from Russia by the end of the year under fresh European sanctions to punish Moscow for its invasion of Ukraine.

The landlocked refinery is the source of 90% of Berlin’s fuel and has received all its crude from Russia via the Druzhba pipeline since the plant was built in the 1960s.

One solution considered by Germany has been to temporarily hand control of the refinery’s day-to-day operations to British oil major Shell, which owns a 37.5% stake in Schwedt, according to government and company sources.

Shell, which saw Germany block the sale of its stake in Schwedt to Rosneft last year, is willing to step in as an interim operator, two of the people said, including a company source. But it is neither interested in taking over a larger stake nor being a permanent operator, they said.

Officials have also sounded out the idea of handing operations to Polish refinery PKN Orlen which could play a key role in efforts to reroute the refinery’s crude supplies away from Russia.

PKN Orlen and Shell declined to comment. Rosneft, PCK and the Polish government did not immediately reply to requests for comment.

A spokesperson for Germany’s Economy Ministry, which is in charge of energy, said: “We are working flat out to find a solution. We know the problem and are working on it.”

Poland insists that Rosneft must be ousted from Schwedt, Germany’s fourth-largest refinery, before a potential deal including state-controlled PKN, the people said.

Rosneft, meantime, has so far refused to engage with Germany to discuss a sale of its 54.17% stake in Schwedt or any other solutions that could resolve the situation, the people said.

Italy’s Eni holds the remaining 8.33% and last month confirmed it was in the process of selling it.

“It’s not trivial to solve this,” German Economy Minister Robert Habeck said on Monday with regard to Schwedt, adding a working group had been set up to discuss its prospects.

Berlin has the option of taking control of Schwedt from Rosneft or even expropriating the firm, which it can do through energy security legislation recently updated to facilitate nationalisation.

Expropriation could spark retaliatory steps by Moscow, and the biggest fear in Germany would be that Russia cuts natural gas supplies, the people said. Europe has yet to draw up plans for how to cut dependency on Russian gas.

Any alternative crude supply would be costly, putting further pressure on German consumers as Europe’s biggest economy struggles with recessionary risks.

The EU plans to impose an embargo on 90% of Russian crude oil imports by the year end. The plan excludes landlocked Hungary, Slovakia and the Czech Republic whose refineries get all their feedstock through the Druzhba pipeline from Russia.

Germany and Poland are gradually increasing crude supplies to Schwedt and the neighbouring TotalEnergies-owned Leuna refinery via other, smaller pipelines from the Baltic ports of Rostock and Gdansk.

Poland has offered to allocate spare capacity at its oil terminal in Gdansk and could ship sea-borne crude oil via its pipelines from the port to the two German refineries, on the condition Rosneft is removed as an owner of Schwedt.

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