Germany and Poland have finally reached an agreement that will see Poland supply enough crude to Germany's Schwedt refinery that it seized from Russia in September to run at a capacity of 70% from January, meaning it will no longer need Russian crude.
Berlin has set a target to eliminate Russian oil imports by the end of the year and has been working with Poland to secure supply for Schwedt, which provides 90% of Berlin's fuel.
The supply proposal will see 2-3 ships loaded with 100,000 tonnes of crude each a month at Gdansk in Poland for unloading at Schwedt starting next year. That would amount to some 3.5 million tonnes per year, with the rest coming via Rostock on the Baltic.
Back in September, Germany seized the local unit of Russian oil major Rosneft PJSC, including three oil refineries as Berlin goes for a radical overhaul of its economy, hoping to control its industrial base and prevent shortages and blackouts this winter.
"Over the next few months, we'll have to continue to preserve critical infrastructure in order to achieve energy independence," Verena Hubertz, a leading lawmaker for Scholz's Social Democrats, told Bloomberg.
Rosneft protested against the seizure calling it illegal and saying it amounts to an expropriation of equity assets in which it had invested €4.6bn in refining capacity. In a company statement, the Russian oil giant said it will "consider all possible measures to protect its shareholders, including legal action."
Together, the three refineries run by Rosneft Germany provide some 12% of Germany's total refining capacity, and the PCK Schwedt refinery near Berlin is key. This refinery, on the border with Poland, supplies fuel to the Berlin-Brandenburg region and tensions have been rising over the possibility that the refinery would grind to a halt, and its workers laid off.
This is a restive region and the German chancellor is keen to avoid the consequences of a workers' lament here.
Seizing Rosneft's assets and placing the refinery under state control was a political move that staves off a shutdown and layoffs, and prevents possible unrest. However, the big question was where it would get its crude from since it's been running on Russian crude. That question has now been answered.
By Alex Kimani for Oilprice.com
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Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. More