It is a far-reaching decision – for the PCK oil refinery in Schwedt, Brandenburg, but also for millions of consumers at the pump, when flying or heating: The federal government has placed under the German subsidiaries of the Russian state-owned company Rosneft . government control. The Federal Network Agency now also has the final say in PCK.
Until now, gasoline, diesel, heating oil, kerosene and other products have been produced there from twelve million tons of crude oil every year. PCK serves Berlin and the northeast. This also indirectly affects the entire German market: If production in Schwedt is not going well, this can affect supply and prices.
Now Chancellor Olaf Scholz and Minister of Economy Robert Habeck have made it very clear: By decision of the federal government, the area is protected. 1200 jobs would be saved and security of supply guaranteed. Scholz spoke of “good news” and “a decision to protect our country”. What? is everything clear now?
1. Background: A Russian operator produces Russian oil
PCK – VEB Petrolchemies Kombinat Schwedt in GDR times, hence the acronym – has been supplying Russian oil through the Druzhba pipeline for decades. Previously it belonged to a good 54 percent of Rosneft’s subsidiaries. He initially wanted to buy a 37.5 percent stake from co-owner Shell, but this was put on hold. When Russia invaded Ukraine at the end of February and the EU decided to impose an oil embargo against Moscow, the German government faced two problems: PCK was dependent on Russian oil. And the Russian operator was in charge. According to Habeck, he had no intention of turning away from Russian oil.
2. Diagram of Habeck’s solution
Habeck went to Schwedt in early May and outlined a solution: shipping non-Russian oil through other channels, federal financial assistance, and a possible trust structure. Habeck State Secretary Michael Kellner later prepared a regional guarantee: PCK will continue to operate in 2023 without oil from the Druzhba pipeline. However, it remained unclear whether it will be fully implemented.
According to the Ministry of Economy, initially only 50 to 60 percent of fuel needs can be covered through the port of Rostock. If parts of the refinery fail, not only jobs would be at risk. There would probably be a regional oil shortage in the short term. Work has been going on for months to close the gap. Habeck targeted the oil tanker from the Polish port of Danzig. The problem: Poland has no intention of supplying the Russian state company Rosneft during wartime.
3. The state enters
Habeck spoke earlier about the trust solution. This is exactly what is happening now with trust management for six months. The legal foundations were laid in mid-May in the Energy Security Act. In order to obtain distribution, this gives “the possibility of guarantees on companies in the essential infrastructure and, as a last resort, the possibility of expropriation”.
Government intervention in the PCK was weak for the federal government. It was long feared that Russia would cut gas supplies through the Nord Stream 1 pipeline in retaliation. Moscow did it. Then there was concern that Russia would also stop the supply of oil immediately, without waiting for sanctions. This risk continues, as Scholz admitted on Friday. “We don’t know what will happen now.”
4. What does the federal government announcement mean?
If Russia stops delivering oil to Schwedt immediately, capacity utilization may decrease for a short period of time until a replacement arrives. Scholz and Habeck made every effort to calm down. Preparations had been made for a long time for the fact that Russia will not submit again for reasons related to the war in Ukraine, said the Chancellor. “We’ve prepared this case specifically.”
For this purpose, the capacity of the existing pipeline from Rostock to Schwedt will be expanded. It should be rapidly expanded to an annual capacity of up to nine million tonnes per year. That would ensure 75 percent utilization of the refinery. However, it will take time for the federal government to build in the 400 million euros estimated for this.
The second solution is to negotiate with Poland about delivery through Danzig. These are very advanced, said Habeck. There is probably no firm commitment from Warsaw yet, the minister pointed out. But that was not expected as long as Rosneft was still in charge of PCK. The federal government also wants to talk to Kazakhstan to get more oil from there through Druzhba.
5. The government encourages workers
The Chancellor’s answer to the question of how busy PCK will be from January remained vague: “In fact, we believe that no matter what happens, we have a good chance that there will be a sufficient supply of oil, so that the refinery can operate. .” If things change frequently, the employment guarantee should come into play.
“No one should have to worry about not being able to pay their mortgage, their bills at home or anything else,” said Brandenburg Prime Minister Dietmar Woidke. However, the entry of the government and the transition to new sources of supply will probably demand a lot from the workers at Schwedt in one way or another. In the medium term, a change is imminent: Schwedt is to abandon oil and produce “green” hydrogen.
6. Users should continue to be able to refuel and heat
Habeck repeatedly insisted that the supply of refinery products was guaranteed. Düsseldorf-based economist and energy expert Jens Südekum also sees great opportunities for this. The concept presented by the government is not surprising – that is probably why it was well prepared, Südekum told the German News Agency. If it is resolved by transit through Poland, PCK should work at full capacity. From Südekum’s point of view, the economic downturn also helps ensure reliable and affordable access. The price of western oil has recently fallen significantly.
© dpa-infocom, dpa:220916-99-788860/3 (By Verena Schmitt-Roschmann and Martina Herzog, dpa)