Germany's plan to end Russian oil imports puts refineries under strain

BERLIN

Several major refineries in Germany are facing have come under strain due the government’s decision to completely stop Russian oil imports at the end of this month.

The Schwedt refinery, which supplies 90% of all petroleum products consumed in Berlin, will operate at 70% of its normal capacity from January, public broadcaster ZDF reported.

The refinery, the fourth-largest in Germany, has been heavily dependent on deliveries of Russian crude oil via the Druzhba pipeline.

Michael Kellner, state secretary at the Economy Ministry, told ZDF that Russian oil will be replaced with supplies via pipelines from Germany’s Rostock port and neighboring Poland.

According to the government’s plan, the pipeline from Rostock will fulfill about 55% of the Schwedt refinery’s supply needs.

Berlin is hoping to get another 15% from the Gdansk terminal in northern Poland, and is also in talks for oil imports from Kazakhstan, according to the report.

Germany’s ban on Russian oil imports could also hamper production at other refineries, such as Leuna, one of the country’s biggest chemical industrial complexes.

Manuel Frondel, an expert from the Leibniz Institute for Economic Research, warned of the imminent risks to the German economy.

“It is not clear whether we are ruining Russia, or rather ourselves, by stopping oil imports from these pipelines,” he said.

He said the ban could lead to shortages of diesel and petrol in the eastern Germany, as well as job cuts at refineries.

Germany’s relations with Russia have been strained over the war in Ukraine, with Berlin accusing Moscow of war crimes, halting bilateral cooperation, and imposing tough economic sanctions.

Before the war began in February, Russia was supplying nearly 55% of Germany’s natural gas and 35% of its crude oil.

Chancellor Olaf Scholz’s coalition government has decided to completely stop Russian oil imports by the end of this year, and reduce gas imports to a minimum, while striking deals with Qatar and the UAE to import liquified natural gas.