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The Russian oil of “friendship”, cumbersome legacy of a German refinery

The PCK refinery in Schwedt, east of Berlin, April 2, 2022
The PCK refinery in Schwedt, east of Berlin, on April 2, 2022 ( John MACDOUGALL / AFP/Archives )

Russian oil has supplied the Schwedt refinery for decades, a former East German combine that survived reunification but may not recover from a halt in imports of crude oil from Siberian deposits.

“The fear of tomorrow is very close to what it was after the fall of the wall,” Buckhard Opitz describes the feeling of the 1,200 employees of the PCK company.

This 60-year-old joined the refinery in 1977 and has not forgotten the economic turbulence that accompanied the reunification of Germany in 1990 with its parade of decommissioned industrial sites and painful privatizations.

Schwedt’s refinery survived, subject to major restructuring, because “it was one of the most modern, because we have always been at the top,” said Mr Opitz, local representative of the chemical and energy union IG BCE.

Since Moscow’s offensive in Ukraine, the city near the Polish border has once again been gripped by uncertainty.

The plant may well know it’s essential, as it supplies about 90% of the fuel and fuel consumption in Berlin and the region, including the airport’s kerosene, the argument isn’t enough to put your mind at rest.

To complicate the equation, Russian oil giant Rosneft, controlled by the Kremlin, is the site’s majority shareholder.

End of the “normal” world

At the local Social Democratic Party (SPD) office, people are avoiding speaking out “because the fears are big enough already”. Many local businesses depend on the refinery’s activity.

Even if the European Union was satisfied on Thursday with a decision on an embargo on Russian coal, sanctions against Russian oil and gas will come “sooner or later”, European Council President Charles Michel assured.

The PCK industrial estate and the Schwedt refinery, in Germany in November 2021
The PCK industrial estate and Schwedt refinery, in Germany in November 2021 (John MACDOUGALL/AFP)

Germany refuses an immediate embargo on all Russian energy sources, especially gas. But Berlin wants to gradually free itself from it and almost stop buying Russian oil by the end of the year.

But this oil is the raison d’être of the Schwedt refinery, where a branch of the world’s longest oil pipeline leads from southeastern Russia.

The “Druzhba” pipeline was put into operation in the 1960s to transport crude oil from the USSR to the countries of the Eastern Bloc. It remains an essential source of crude oil for many Central European refineries. “Druzhba” means “friendship” in Russian.

At the end of 2021, Rosneft announced that it would increase its stake in the PCK refinery from 54 to 92% by buying its shares from Shell. The Russian group is chaired by Igor Setchin, an oligarch close to Vladimir Putin and the target of Western sanctions.

“The world was normal then. There was no reason to refuse Russian participation, just as there were German participations in Russia,” assures AFP Alexander von Gersdorff, spokesman for the German Petroleum Industry Association En2x.

Today he is convinced: “Without oil from Russia, the Schwedt refinery would have to be shut down. There would be no more petrol or diesel for Berlin, the region or western Poland”.

“Unrealistic”

The German government has acknowledged that Schwedt’s case is complex. The option of temporary nationalization has been suggested in the media.

Subsidiaries of the giants Gazprom and Rosneft are key players in Germany's energy infrastructure
Subsidiaries of the giants Gazprom and Rosneft are major players in the German energy infrastructure (John MACDOUGALL/AFP/Archives)

This is the exceptional measure recently chosen for the German subsidiary of Gazprom, over which Berlin has taken control.

By sketching a diagram on a corner of paper, Buckhard Opitz makes sure that alternatives to Russian oil can be found for the refinery, a metal monster that stands at the exit of the city, one hundred kilometers from Berlin.

There is a pipeline coming from the German port of Rostock, which could receive crude oil from other parts of the world, he says. Poland could complete supplies through the port of Gdansk.

“Unrealistic”, says Alexander von Gerstoff, taking into account the logistical difficulties: Rostock cannot accommodate sufficiently large tankers; Poland needs all its capabilities for its own diversification. And the refineries in East Germany are designed to work with Russian crude oil, with special characteristics.

“Various logistics and technology scenarios” are being studied, the company told AFP.

“The final decision will be political,” Buckhard Opitz said.

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