PCK Schwedt refinery, which relies on Russian Urals crude through the Druzbha pipeline network, has made good preparations in recent months and will be able to produce without Russian oil in January, a German economy spokesperson told Bloomberg News.
The spokesperson affirmed that the Schwedt PCK factory will continue to produce comfortably at the installed capacity level. This is partly due to Poland's guarantee that the country will transport the additional oil through Gdansk. PCK Schwedt supplies fuel to Berlin and eastern regions of Germany.
The news comes as the market fears a sharp cut in production by a German refinery if oil through the Druzbha pipeline is completely suspended and negotiations with Kazakhstan on oil supplies have yet to end.
Germany is under great pressure to find alternative energy supply as Europe's largest economy has pledged to stop all oil imports from Russia by 2023.
Compared to some other European countries, Germany has taken a tougher stance on Russian oil flows transported via pipeline.
Russian oil giant Rosneft PJSC has a stake in the PCK Schwedt refinery until the German government took control of the plant earlier this year. In addition to Schwedt, Totalenergies' Leuna refinery also depends on Russian oil via the Druzbha pipeline.
To support the two refineries, a pipeline from Germany's Rostock port is being upgraded but the new pipeline capacity is too small to immediately replace the flow from Druzbha.
A German economic ministry spokesman confirmed that from January 2023, the pipeline from the port of Rostock will operate at full capacity.
German refineries are negotiating with Kazakhstan on oil purchases but there are still many barriers, mainly because crude oil will have to be transported through Russian territory.
However, under current sanctions that allow the use of an existing pipeline network for Kazakhstan's oil, the German Economy Ministry affirmed.
Due to the nature of crude oil, mixing crude oil during transportation in pipelines and tankers is inevitable and also permitted under EU sanctions, the spokesperson said.
The German economy ministry representative noted that the mix must not increase Russian crude oil production or sales or create other benefits for Russian companies than transportation costs.
Every year, KMG Trading - a subsidiary of Kazakhstan's state-owned oil company KazMunayGas JSC - puts 13 million tons of crude oil in Russia's pipeline system and is allocated an equivalent amount of Urals for sale on international markets.
However, Kazakhstan's oil producers have not yet submitted any official requests to Russia's Transneft to transport oil to Germany via the Druzhba pipeline in January 2023, according to Transneft spokesperson Igor Dyomin.
All requests for transportation via Druzhba in January were made and so far no Kazakhstanese goods have been transported to Germany. There may be changes to the transportation plan for January, but only in the second half of the month, he said.
