Schwedt refinery threatened with lack of oil: pipeline capacities are not sufficient

And Federal Minister of Economics Robert Habeck (Greens) summarized with satisfaction: "The location is secured." The security of supply is guaranteed.

The Federal Ministry of Economics had Rosneft Germany placed under trusteeship on Friday. Rosneft Germany is the majority owner of the refinery in Schwedt and belongs to the Russian oil company Rosneft.

However, not all obstacles have been removed to ensure the long-term operation of the refinery. So far, PCK Schwedt has been almost one hundred percent via the “Druzhba” (“Friendship”) pipeline supplied with Russian oil. Unlike the Czech Republic or Hungary, for example, Germany committed itself in May to using pipeline oil from January 1, 2023 Russia to renounce.

In future, the oil for the refinery will have to come to Schwedt by other routes. The crude oil pipeline that runs from Rostock to Schwedt plays an important role here. According to the Federal Ministry of Economics, the pipeline can transport around five to seven million tons of oil a year in its current condition. That equates to “about 48 to 60 percent” of PCK refinery utilization, according to the ministry.

Pipeline cannot carry enough oil

According to the ministry, the refinery can only be run “at minimum load” with these quantities alone. However, experts warn that the ministry's assumption is too optimistic. Even the value of 60 percent represents the absolute lower limit the amount of oil required to operate the refinery.


The country Brandenburg therefore insists on increasing the capacity of the pipeline: "Upgrading the pipeline is the most important step in order to achieve capacity utilization of the PCK refinery as quickly as possible, which is approaching the level of operation before the start of the war," says Brandenburg Minister of Economic Affairs Jörg Steinbach (SPD).

The federal government sees the problem and wants to push ahead with the expansion of the line. The pipeline has so far only been used for emergency supplies and never in continuous operation, according to the Ministry of Economic Affairs. "It is therefore essential to quickly upgrade them to a stable, annual maximum capacity of around nine million tons per year," the ministry said. This corresponds to a capacity utilization of the PCK refinery of 75 percent.

Oil depot in Gdansk

The Schwedt refinery is also connected to a pipeline to Gdansk, Poland.

(Photo: Reuters)

The federal government wants to assume the necessary costs of an estimated 400 million euros "due to the national interest in guaranteeing the security of energy supply for East Germany". The Federal Ministry of Economics estimates a construction phase of two to three years. Attempts to attract private investors from the oil industry to the project had failed.

Experts warn that the supply situation for the refinery in Schwedt will only stabilize once the pipeline has been completely renewed. The transition period is therefore critical. There is no convincing solution for the construction phase. In addition, upgrading the pipeline is not enough. The capacities of the port of Rostock must also be expanded. The federal government also promises financial help for this.

If Schwedt fails, East Germany and West Poland will have big problems

The refinery in Schwedt plays a role in supplying the greater Berlin-Brandenburg area and western Poland with heating oil, petrol, diesel and kerosene a crucial role. 90 percent of the petroleum products consumed in the region come from Schwedt. Should the refinery fail, procuring a replacement from other regions would involve a great deal of logistical effort. This could result in high prices and supply bottlenecks.

In order to increase the transport capacity of the pipeline from Rostock to Schwedt during the transition phase, so-called flow improvers are to be used in the future, which, according to the Ministry of Economic Affairs, can increase the capacity of the pipeline by ten percent. The Federal Ministry of Economics is also hoping that oil can also be obtained via the Polish port of Gdansk during the two to three-year renewal phase of the pipeline.

However, delivery via the existing pipeline from Gdansk to Schwedt is anything but certain. On the one hand, this is due to the fact that Polish capacities are limited because Polish refineries and the refinery in Leuna in Saxony-Anhalt are also supplied via Danzig.

On the other hand, the Polish government has repeatedly emphasized in recent months that oil deliveries via Gdansk to Schwedt are only acceptable if no Russian company is making money from processing the oil.

If Poland It was initially not clear whether the trusteeship model now chosen by the federal government would be sufficient for Rosneft Germany, the refinery's largest shareholder. Formally, Rosneft remains the owner of Rosneft Germany. Profits flow into a trust account or are invested in the company. The Federal Ministry of Economics said it would ensure that no more money flowed to Russia.

Robert Habeck, Olaf Scholz and Brandenburg's Prime Minister Dietmar Woidke

It is far from certain whether Poland will send oil via the pipeline from Gdansk.

(Photo: dpa)

Economics Minister Habeck expects Poland to follow suit. The talks with the Polish side are "well advanced", said the economy minister. There was initially no reaction from Poland.

Russia could stop oil supplies

Meanwhile, there is speculation that Russia could simply stop supplying the Druzhba pipeline completely given the federal government's trusteeship over Rosneft Germany. An insider warns that this could happen very quickly. The Federal Ministry of Economics points out that the oil storage facilities in Schwedt and Leuna are full and can be used for a few days without any deliveries. Oil from the national oil reserve can also be planned for transport.

>> Read here: Oil supplies halted at part of the Druzhba pipeline

The Federal Ministry of Economics announced on Friday that Rosneft Germany had been put under trusteeship to ensure the refinery's continued existence. The trust administration is exercised by the Federal Network Agency.

The federal government thus takes over control of Rosneft Germany's respective shares in the three refineries PCK Schwedt, MiRo (Karlsruhe) and Bayernoil (Vohburg). Rosneft Germany accounts for around twelve percent of Germany's oil processing capacity, making it one of the largest oil processing companies in Germany. The trusteeship is initially limited to six months.

the Amendment of the Energy Security Act (EnSiG) paved the way for this. At the same time, lawyer Christoph Morgen is to lead the business of the Rosneft subsidiaries in Germany as a trustee. Rosneft Germany is the majority owner of the refinery in Schwedt with 54.17 percent. The other shareholders are shell (37.5 percent) and Eni (8.33 percent).

Banks and companies avoid Rosneft

Habeck said that one had seen that insurers, IT service providers, but also customers had increasingly turned away from Rosneft Germany. The problem has existed since the sanctions against Russia came into force: banks and business partners avoid companies with Russian owners - even if they are not subject to sanctions. Insiders speak of "overcompliance".

They report that this has become a major problem for Rosneft Germany. According to the Federal Ministry of Economics, the growing uncertainty was the reason for putting Rosneft Germany under trusteeship.

The ministry said that the maintenance of business operations at the affected refineries was "at risk due to the ownership of the companies".

More: Cold withdrawal of Russian gas – Germany is threatened with an emergency winter

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