Written by 5:59 pm Europe Economy

Germany warns of local oil shortages after EU ban on Russian imports

Germany has warned of local oil shortages when the EU-wide ban on Russian oil comes into force in January, in a further sign of the disruption Europe’s energy crisis is wreaking on the continent’s largest economy.

The warning was contained in a response to a question posed by MPs from the opposition Christian Democrats about energy security in east Germany, home to two big refineries that are highly dependent on Russian crude.

One of them, Schwedt, is a key supplier of petrol, diesel, jet kerosene and fuel oil to the regional economy, serving big local consumers such as Berlin’s international airport.

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

“Depending on the scenario, local, temporary supply shortages and price increases can’t be excluded,” ministers said in their response.

It compared these to the bottlenecks that arose in southern Germany over the summer when sweltering temperatures caused a dramatic drop in water levels on the Rhine, disrupting shipping and pushing up transportation costs on Europe’s key commercial waterway.

The EU’s sanctions against seaborne exports of Russian oil take effect on December 5 and are a key part of the bloc’s efforts to deprive Russian president Vladimir Putin of billions of dollars of revenue to finance his war against Ukraine.

Hungary, Slovakia and the Czech Republic negotiated temporary exemptions from the ban, citing their lack of alternatives to Russian oil. All three rely heavily on the Druzhba pipeline that runs directly from Russia.

But despite the fact that Schwedt and another eastern refinery, Leuna, are also connected to Druzhba, Berlin said it would implement the embargo in full by the end of this year, with no exceptions. Poland agreed to do the same.

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

In its response to the CDU MPs, the government said the effect of reduced output from Schwedt and Leuna as a result of an interruption to supplies of Russian oil would be “challenging but manageable”.

It said Schwedt was currently trying to secure alternative supplies through two different pipelines — one running from the German Baltic Sea port of Rostock and another from the Polish port of Gdansk.

The government said the Rostock-Schwedt pipeline “is and remains an important pillar of non-Russian crude oil supply to [the Schwedt refinery]”. It can currently pump 5-6.8mn tonnes of oil a year to Schwedt but upgrading work should increase its capacity to about 9mn tonnes a year. The government announced in September it would provide €‎400m to finance the upgrade.

Ministers insisted that the pipeline can supply Schwedt with the “minimum volume technically required” to ensure normal operations. However, critics of the Russian oil embargo have noted that Schwedt needs around 12mn tonnes a year of crude oil to operate at full capacity.

The Gdansk option remains on the table, officials have said, with the first tanker of oil to be delivered to Schwedt via Gdansk arriving at the refinery last week.

But in its response to the CDU the government damped expectations that the Gdansk-Schwedt pipeline could end up being a major source of supply for the refinery. It said the line had only “limited” capacity to pump oil to Schwedt because it also supplied Leuna and refineries in Poland.

“Taking into consideration the current technical capacities, requirements and potential for optimisation, the government would welcome volumes of about 2-3mn tonnes a year” through the Gdansk pipeline, it said.

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