Dividends and Germany seizes Russian oil refineries

Over the past 40 years, Russian has invested billions of dollars to move Russian oil from the north including Siberia to Europe. The pipelines moves the oil and gas and Europe has been a steady and growing consumer. The pipelines include the refinery which makes breaks the oil to something a consumer to use. When Russia invaded Ukraine, the west imposed sanctions and as the sanctions lasted from weeks to months, Russia flexed its muscles to cut back the oil and gas going though the pipelines to the refineries. It might have been maintenance issues, because all pipelines need regular maintenance, but the time frame was becoming too long. What should Europe do?

In an article by Claudia Scholz, the German government decided to take control of 3 Russian refineries located in Germany. It is ironic, in a capitalist country has decided to nationalize a communist country’s assets. The most important refinery is the PCK refinery in Schwedt. The other refineries are the Rosneft Deutschland and the RN Refining and Marketing.

The refineries will be run by the Federal Network Agency and itself of Russian oil and gas, Germany will import oil from Poland, the US, Libya and any other oil and gas producer. Because of the sanctions, Poland did not want to deliver oil to a Russian-owned refinery.

Russian state oil company Rosneft has accused the German government of a forced expropriation of its German subsidiaries. The company spoke of an illegal seizure of assets and announced that it would take legal action to protect its assets. (This is what the US government said about Cuba seizing assets and the issue is still in the courts).

Linking to dividend paying stocks, all companies with assets in foreign countries face the prospect of higher taxes, etc when governments change from pro-business to pro nonbusiness. The language is designed to protect the assets or receive adequate compensation if something happens. The term rule of law has to do receiving a fair value on the assets. For your investments, how much of gross income is received from outside the US and do governments abide by the rule of law?

There are more questions than answers, till the next time – to raising questions.


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