US Excludes Rosneft Germany From Russia Sanctions, Floats 6-Month Window

Germany’s Economy Minister told Reuters on Tuesday that the Trump administration had provided written confirmation that the German division of Russia’s Rosneft would be excluded from new American energy sanctions, since the assets are no longer under Russian control.

Economy Minister Katherina Reiche said Washington had sent a “Letter of Comfort” acknowledging that Rosneft Deutschland had been completely separated from its Russian parent company. Further, the United States has reportedly given Germany six months to resolve the issue of how Rosneft’s German assets will be managed, Bloomberg has reported.

In the meantime a temporary restricted license for Rosneft Deutschland is under consideration, which Berlin is heavily reviewing. The company holds stakes in three German refineries, representing around 12% of the country’s total refining capacity.

Berlin has thus far refrained from full nationalization of the assets on fears that this drastic action could prompt severe retaliatory measures by Moscow against German companies still operating in Russia.

Earlier in the week, Germany’s Economy ministry sought to assure, “The government is in contact with relevant authorities in Washington.”

Berlin has been arguing that the new sanctions should avoid targeting Rosneft’s subsidiaries in Germany as they remain “decoupled from their Russian parent company.”

Financial Times has pointed out there could be serious domestic political ramifications hanging in the balance:

The PCK refinery, in the north-eastern German town of Schwedt, is of particular concern, one person familiar with the assets said. Sitting atop the Druzhba pipeline, about 4,000km from central Russia, it accounts for more than 12 per cent of Germany’s refinery capacity, making it one of the largest oil processing companies in the country.

The threat to the refineries is yet another challenge for the German government, which is struggling to reignite a stagnant economy grappling with high energy prices — the costly legacy of previous chancellors to shut down nuclear plants and to rely on cheap Russian energy imports.

The PCK refinery also poses a political problem for the ruling coalition between Merz’s Christian Democrats and the Social Democrats: it is a large employer in the former communist state of Brandenburg, where support for the far-right Alternative for Germany party has surged.

As Politico notes of the fresh US sanctions, “Donald Trump’s surprise move to sanction Russia’s largest oil companies won’t paralyze Vladimir Putin’s war machine — but it will help the EU kick Russian oil out of the bloc for good.”

Last week, he announced the “tremendous” new sanctions targeting Russia’s Lukoil and its state-owned Rosneft, and “The details of the new measures are still being worked out. But in theory, they threaten to force the two firms to sell their assets and end their remaining oil pipeline supplies to Europe.”