Swede A good nine months after the Russian attack on Ukraine, the European Union is getting serious. From Monday (December 5th) no more Russian oil will be imported by sea. From January onwards, Germany also wants to stop Russian imports via the Druzhba pipeline. The third step follows on February 5th: An embargo on diesel and other petroleum products from the Russian Federation. The aim is to dry up the Kremlin’s war chest.
But aren’t the Europeans cutting themselves in the flesh with that? In Germany, in the middle of the gas and electricity crisis, some fear bottlenecks and higher prices at the gas station. Concerns are particularly great in the Brandenburg PCK refinery in Schwedt, which has been linked to the Druschba for decades. An overview.
Before the start of the Ukraine war, oil imports from Russia covered around 35 percent of Germany’s needs. Roughly speaking, one third of this came by tanker, two thirds flowed via the Druzhba to the East German refineries in Leuna and Schwedt. According to the Fuels and Energy trade association, crude oil imports from Russia fell to 16 percent by October 2022. Replacements come from the UK, USA and Kazakhstan.
The industry association assumes that the Russian tanker oil affected by the EU embargo will be completely replaced in good time. The refinery in Leuna also wants to do without Russian oil from the Druzhba by the end of the year. The sticking point remains: the PCK refinery in Schwedt.
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What is the situation for PCK?
According to Economics Minister Robert Habeck (Greens), the majority owners – two daughters of the Russian state-owned company Rosneft – have long had no interest in turning away from Russian oil. In mid-September, Habeck intervened and effectively took control of the PCK away from the Rosneft subsidiaries by means of trusteeship. In addition, the government made far-reaching commitments for the Oder plant, including a two-year employment guarantee for the 1,200 employees and a huge investment package for a greener future.
>> Also read: Raffinerie Schwedt receives crude oil via Poland for the first time
However, the supply of the refinery without Druzhba oil has not been finally clarified to this day. The supply in Berlin, Brandenburg and Mecklenburg-Western Pomerania as well as at the capital’s airport BER largely depends on the PCK.
What are the options for the PCK?
Habeck’s State Secretary Michael Kellner (Greens) has been working on three options for months to get enough crude oil for PCK. Up to 55 percent of the demand is to be brought to Rostock by tanker and from there to Schwedt via an existing pipeline. The problem: The pipeline is too small to transport even more crude oil. The federal government wants to expand it, but that will take at least two years.
Therefore, additional quantities should come via the Polish port of Gdansk, which also supplies the refinery in Leuna. “We are conducting intensive and good talks with the Polish government in order to ensure the best possible utilization of the PCK Schwedt,” said Kellner of the German Press Agency. But there is no firm commitment.
“I see no danger to the security of supply in East Germany.” Jörg Steinbach (SPD), Economics Minister of Brandenburg
The same applies to the third option, importing Kazakh oil. Waiter said: “A delegation from the Federal Ministry of Economics was in Kazakhstan in September. We are expecting representatives of the Kazakh government in Berlin in December. However, since the oil in the Druzhba pipeline would have to be transported through Russian territory, there is always some uncertainty.”
Is the German import ban not coming after all?
In Brandenburg, some are now restless. “As far as alternative deliveries are concerned, we are not a step further,” said CDU parliamentary group leader Jan Redmann. He fears that after the oil embargo, the refinery in Schwedt will only be half utilized. The district administrator of the district of Uckermark, Karina Dörk (CDU), harbors the hope that “it will be possible on January 1st. delivery will continue via the Druzhba”.
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As a reminder, the EU embargo officially only applies to tanker oil. The waiver of line oil from the Druzhba is a commitment by the federal government that goes beyond this, laid down in an EU protocol note from the end of May. Is a departure from this conceivable? Kellner replied: “The import ban is a commitment by Chancellor Olaf Scholz for the federal government. It is our job to implement the individual building blocks step by step so that additional oil deliveries for Schwedt come via Poland and Kazakhstan, and that is exactly what we are working on with all our strength.”
The bottom line is that the Düsseldorf economist Jens Südekum expects that the PCK will lack oil quantities at least at the beginning of the year: “In the short term, it cannot be assumed that the refinery in Schwedt will be able to continue producing at full capacity.” Supply bottlenecks for diesel and kerosene are then possible.
Are the gas stations in East Germany running out of fuel?
Despite everything, the Brandenburg state government is optimistic. “There is a high probability that the region will be supplied with petroleum products,” said Economics Minister Jörg Steinbach (SPD). Short-term problems are conceivable, but the danger is small. Waiter also assured: “I see no danger to the security of supply in East Germany.” In the event of bottlenecks, other refineries usually plugged the holes.
Is fuel getting more expensive?
“I don’t see permanently higher prices at gas stations in East Germany,” said Kellner. Sören Pellmann, the left-wing faction’s East German representative in the Bundestag, was completely different: In the RND he recently warned of a massive increase in fuel prices in Berlin and East Germany. Economic expert Südekum dares the following forecast: “The effects of the embargo on crude oil should be limited. The transition periods were long enough for market participants to adjust to them.”
But he added: “I expect a greater impact on the diesel market, which will also be subject to the embargo from February 2023. Imports from Russia continue to play a major role here.” Once this is over, higher prices at the pumps and temporary supply gaps cannot be ruled out.
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