Germany is stepping up efforts to build alternative supply routes as it strives to replace Russian oil supplies, with a potential key role on the cards for the Baltic Sea port of Rostock.
Russian crude supplies will eventually dry up when the European Union-mandated embargo comes into full effect, spurring the German government to look for possible alternatives to the Druzhba pipeline, which carries Russian crude across Belarus and Poland to supply German refineries.
These efforts were reinforced by the move last week by Germany’s Federal Network Agency, Bundesnetzagentur to take control of the country’s fourth largest refinery in Schwedt, and introduce temporary restrictions at two other refineries, Miro in Karlsruhe and Bayernoil in Vohburg an der Donau, in which Russian players hold an interest.
Germany received 32% of its oil imports from Russia between January and June this year, down from 40% in the same period of 2021, data from statistics office BAFA showed, according to Reuters.
In June alone, the Russia’s share in Germany’s total oil imports declined to 24%, according to BAFA.
Germany aims to be completely independent of Russian crude by the end of this year, State Secretary for Financial Market Policy & European Policy Joerg Kukies confirmed in June, four months after the Russian invasion of Ukraine began.
As part of the ongoing efforts to make this possible, Federal Ministry for Economic Affairs & Climate Action spokesperson told Upstream that “Schwedt can be served via the pipeline connected to the port of Rostock”.
This route can provide about 50% of total supplies to the plant and the arrangement “can start immediately”, the spokesperson said.
“Schwedt still obtains Russian oil from Russia via Druzhba,” the spokesperson said. “For some time now, the plant has also been receiving oil via the pipeline from the port of Rostock, with supplies coming from the USA and Libya. New contracts have been signed.”
Germany is also in talks with Kazakhstan on securing oil deliveries for the Schwedt refinery via the Druzhba pipeline, according to a policy document released by the German government and quoted by Reuters.
The spokesperson also said that efforts to adjust the plants to enable them to process oils with different qualities and density from the Russian export blend, have been promising.
“Several types of oil have been tested in recent weeks and months, many have proven suitable and are also readily available on the world market. The pipeline [from Rostock to the refinery Schwedt] is now being upgraded to carry more oil,” the spokesperson said.
Germany’s push to reduce its dependence on Russian energy following Russia’s invasion of Ukraine has involved the government in April taking over the administration of Gazprom Germania — a subsidiary of Russian gas giant Gazprom that was responsible for gas distribution, marketing and storage across Europe.
Russia responded to the move by placing Gazprom Germania and other subsidiaries under its own sanctions, prohibiting Gazprom from having any dealings with them.
To date, the Russian government has not indicated whether similar steps may be taken against the Schwedt, Miro and Bayernoil refineries, which would lead to an immediate halt in oil supplies to the Druzhba pipeline.
Rosneft said in a statement: “The decision of the federal government of the Federal Republic of Germany on putting the company’s German assets under external management of the Federal Network Agency is unfortunately not a surprise to us.
"This decision is illegal and, in essence, is an expropriation of equity assets following the situation intentionally created by relevant sanctions of the European Union and actions of German and Polish regulators with the aim of seizing the assets.”
The statement continued: “The company understands that the decision made by the Federal Government of Germany is not temporary and is, in essence, an irretrievable loss of assets. Rosneft will consider all possible measures to protect its shareholders, including legal action.”
Germany and Poland in talks
As well as the possible expansion of port of Rostock, Germany is also considering importing oil via Poland’s Baltic Sea port of Gdansk, from where crude would enter the Druzhba pipeline.
“We have been in contact with the Polish government for months about possible deliveries via Gdansk to the Schwedt refinery and other plants dependent on Russian oil supply, such as TotalEnergies’ Leuna,” the ministry spokesperson said.
“In addition, the oil storage facilities in Schwedt and Leuna are full and can be used for a few days without any deliveries”, the spokesperson added.
In an emergency, transportation of oil from Gernamny’s national reserves to these plants can be also scheduled, according to the spokesperson.