Poland is more expensive than Friendship – Newspaper Kommersant No. 208 (7409) of 11/10/2022

The German authorities are testing an alternative way to supply oil to the refinery in Schwedt, which has historically been focused on Russian raw materials and received it through the Druzhba pipeline. On the eve of the embargo on Russian oil, which will come into force in December, the plant for the first time delivered a sea shipment of oil through the port of Gdansk, Poland. Analysts say the switch to an alternative supply route will increase the transportation costs of German refineries, and the rejection of cheap Russian oil will worsen their economy.

Rosneft’s German refinery in Schwedt, which was taken over by the German government in September, received European oil for the first time through Polish Gdansk, according to the RBB website. Until now, this refinery, which supplies fuel to most of northeastern Germany, has received oil from Russia via the Druzhba pipeline. But the German authorities began to look for alternative routes after they deprived Rosneft, which fell under blocking EU sanctions back in May, of the management of the plant, where the Russian company owns about 54.2%. In addition, the European embargo on the supply of Russian oil comes into force on December 5: although it only applies to sea shipments, the German authorities have already announced that they will also refuse deliveries via Druzhba.

The other shareholders of the Schwedt refinery are Shell (37.5%) and Eni (8.33%). The primary processing capacity of the refinery in Schwedt is 11.6 million tons of oil per year.

In addition to the plant in Schwedt, the oil refinery in Leuna also depends on supplies via Druzhba. Back in May, this refinery for the first time tested the possibility of delivering oil through the port of Gdansk, and also began to buy oil through the port of Rostock. German refineries followed the path of Polish companies, which for several years tried to look for an alternative to Russian Urals oil and actively purchased sea shipments of Middle Eastern, American and Norwegian oil.

Rosneft is now trying to challenge the transfer of control of German assets in the Federal Administrative Court of Germany in Leipzig. According to the company, the decision of the German authorities “is illegal and, in fact, is an expropriation of shareholding as a result of a situation deliberately created by the relevant EU sanctions and the actions of German and Polish regulators, the purpose of which was to seize assets.” In addition to the refinery in Schwedt, Rosneft owns shares in the Bayernoil refinery (Voburg an der Donau) – 28.57%, MiRO (Karlsruhe) – 24% and was the third largest oil refiner in Germany until control over these assets passed to the country’s authorities.

Back in the summer, Poland and Germany assumed increased obligations to refuse oil supplies from Russia, including imports via Druzhba, which are not formally subject to European sanctions, said Sergey Kondratyev, deputy head of the economic department at the Institute of Energy and Finance. In 2021, the Russian Federation supplied 17 million tons of oil to Germany via Druzhba, and 8.4 million tons to Poland. The oil terminal in the port of Gdansk allows transshipment of up to 23 million tons of oil per year, and theoretically Poland can significantly increase oil supplies instead of Russian raw materials, using the Gdansk-Plock route and further to Germany, the expert believes. According to him, Poland used to use deliveries through Gdansk to import oil from the countries of the Middle East, Norway, and now, on the eve of the embargo on Russian oil, it has begun to increase purchases of sea cargo. Mr. Kondratiev believes that Germany will be able to receive up to 10-12 million tons of oil per year through Poland, but the supply economy will deteriorate by $2-3 per barrel due to rising transshipment costs. In addition, German refineries will also be forced to pay more for oil as Urals trades at a deep discount to Brent.

Dmitry Kozlov