Germany warns of local oil shortages after EU bans Russian imports

Germany has warned of local oil shortages when an EU ban on Russian oil comes into force in January, another sign of confusion as Europe’s energy crisis grips the continent’s biggest economy.

The warning came in response to a question from opposition Christian Democrats on energy security in eastern Germany, home to two major refineries that are heavily dependent on Russian crude.

One of them, Schwedt, is a key supplier of gasoline, diesel, jet kerosene and fuel oil to the regional economy and serves large local consumers such as Berlin International Airport.

In its response, the government detailed its efforts to diversify Schwedt away from Russian oil imports, but acknowledged that the embargo could cause problems for the East German economy.

“Depending on the scenario, a local, temporary supply shortage and price increase cannot be ruled out,” states the ministers’ reply.

He compared them to the bottlenecks that occurred in southern Germany this summer, when sweltering temperatures caused a dramatic leveling of the Rhine, disrupting shipping and increasing shipping costs on Europe’s most important commercial waterway.

See also  Russia bears ‘full accountability’ for demise of Briton in Ukraine, UK says

EU sanctions on Russian oil exports by sea come into effect on December 5 and are a key part of the bloc’s efforts to deprive Russian President Vladimir Putin of billions of dollars in revenue to fund his war against Ukraine.

Hungary, Slovakia and the Czech Republic have negotiated temporary exemptions from the ban, citing that they have no alternative to Russian oil. All three rely heavily on the Druzhba pipeline, which runs directly from Russia.

But even though Schwedt and another eastern refiner, Leuna, are linked to Druzsba, Berlin has said it will implement the embargo in full by the end of this year, without exception. Poland also agreed to do so.

In September, the government went further and took control of Schwedt from its owner, Russian oil giant Rosneft.

In its response to CDU MPs, the government said that cutting Schwedt and Leuna production due to the disruption of Russian oil supplies was “challenging, but manageable”.

See also  Elon Musk raises prospect of cheaper price for Twitter deal

According to the statement, Schwedt is currently trying to secure alternative supply through two different pipelines – one running from the German Baltic Sea port of Rostock and the other from the Polish port of Gdansk.

According to the government, the Rostock-Schwedt pipeline “is and will remain an important pillar of non-Russian crude oil supply. [the Schwedt refinery]”. It can currently pump 5-6.8 million tons of oil per year to Schwedt, but through modernization works, its capacity can increase to 9 million tons per year. The government announced in September that it would provide 400 million euros to finance the development.

Ministers insisted that the pipeline could supply Schwedt with the “minimum amount technically necessary” to ensure normal operation. Critics of the Russian oil embargo, however, have noted that Schwedt needs about 12 million tons of crude oil a year to operate at full capacity.

Officials said the Gdansk option remained on the table, and last week the first oil tanker arrived at the refinery to be delivered via Gdansk to Schwedt.

See also  Traders are predicting further trouble in the UK bond market

But in its response to the CDU, the government played down expectations that the Gdansk-Schwedt pipeline could be the refinery’s main source of supply. He said the line only had “limited” capacity to pump oil to Schwedt because it was also carrying Leuna and refineries in Poland.

Taking into account the current technical capacities, requirements and optimization opportunities, the government would welcome 2-3 million tons per year through the Gdansk pipeline.