Volkswacht Bodensee - Russia to block flow of Kazakh oil to German refinery, Berlin says

The German subsidiary of Russia's state-owned oil company Rosneft told German regulators that the Russian energy ministry had ordered the halt, the ministry said, adding that Moscow had not confirmed the decision directly to the German government.

The move comes amid Russia's war against Ukraine and a global energy crisis sparked by the US-Israeli war against Iran, which has caused major disruptions to global oil and gas markets.

Rosneft Germany "is currently assessing the implications" of the pipeline closure for the refinery and is "utilising all available options to ensure security of supply in Germany", the ministry said.

The PCK refinery near the Polish border supplies much of the Berlin region with fuel, but the German government voiced confidence on Wednesday that the impact would be limited.

Government spokesman Stefan Kornelius said that changes in the "output from the pipeline will not significantly restrict refinery operations", although he added that officials are keeping a close eye on the availability of kerosene in particular.

The German government's "fundamental assessment of the supply situation remains unchanged at the moment", Kornelius said.

The economy ministry said "the lack of Kazakh oil deliveries to the PCK refinery does not ultimately jeopardise the security of supply of mineral oil products in Germany, even if PCK Schwedt would have to operate at a lower capacity utilisation".

A ministry spokeswoman added that the refinery has another pipeline connection to the Baltic Sea port of Rostock, allowing potential seaborne deliveries of crude oil.

The Kazahk oil is currently transported via the Druzhba pipeline, which runs through Russian territory.

One branch of the pipeline runs through Belarus and Poland to Germany, while another branch runs through Ukraine to Hungary.

Damage to the separate Ukrainian section of the pipeline caused a major political rift between Hungary and Ukraine, with Hungary's outgoing Prime Minister Viktor Orban vowing to block a European Union loan for Kyiv until the pipeline is restored.

The German government took Rosneft Germany into trusteeship in the wake of Russia's 2022 full-scale invasion of Ukraine and European Union sanctions on the Russian energy sector.

Kazahk oil was sourced for the PCK refinery to replace Russian crude imports that had previously fed the refinery.

The German government has been searching for a new buyer to take over the Rosneft subsidiary, which is the majority owner of the refinery.

Last year, Berlin won an exemption from US sanctions against the Russian oil industry for the refinery, arguing that Rosneft Germany had been entirely "decoupled" from its parent company.

After Moscow sent its forces into Ukraine, Germany sought to take control of a swathe of Russian energy assets in the country.

It seized Russian gas firm Gazprom's subsidiary in Germany, which had been a key energy supplier before the war but slashed deliveries in apparent retaliation for Western sanctions on Moscow.

D.Schlegel--VB