Russian “friendship” oil, the unwieldy legacy of a German refinery

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

Russian oil has been supplying the Schwedt refinery, a former East German plant that has survived reunification but may never recover after the cessation of crude oil imports from Siberian fields, for decades.

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

Joining the refinery in 1977, this sixty-year-old man has not forgotten the economic turmoil that accompanied German reunification in 1990, with a string of dismantled industrial facilities and painful privatizations.

The refinery in Schwedt survived a major restructuring because “it was one of the most modern because we were always on top,” says Mr. Opitz, local representative of the IG BCE chemical energy union.

After the start of Moscow’s offensive in Ukraine, uncertainty again gripped the city, located near the Polish border.

The plant may well know that this is necessary, since it provides about 90% of the fuel and combustible materials consumed in Berlin and its region, including kerosene from the airport, an argument insufficient to reassure.

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

End of the “normal” world

In the local branch of the Social Democratic Party (SPD), people avoid speaking out “because the fears are already great enough.” Many local businesses depend on the operations of the refinery.

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

PCK industrial park and Schwedt refinery, November 2021, Germany.
PCK industrial park and Schwedt refinery, November 2021 in Germany (John MACDOUGALL/AFP)

Germany is refusing an immediate embargo on all Russian energy resources, especially gas. But Berlin wants to gradually get rid of it and by the end of the year practically stop buying Russian oil.

But this oil is the reason for the existence of the oil refinery in Schwedt, where a branch of the longest oil pipeline in the world leads from the southeast of Russia.

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

At the end of 2021, Rosneft announced its intention to increase its stake in the PSK refinery from 54% to 92% by buying its shares from Shell. The Russian group is led by Igor Sechin, an oligarch close to Vladimir Putin who is under Western sanctions.

“At that time the world was still normal. There was no reason to refuse Russian participation, just like the Germans participated in Russia,” Alexander von Gersdorff, a spokesman for the German Petroleum Industry Association En2x, told AFP.

Today he is convinced: “Without the oil from Russia, the refinery in Schwedt would have to be decommissioned. There would be no more gasoline and diesel fuel for Berlin, or for its region, or for Western Poland.”

“Unreal”

The German government acknowledged that Schwedt’s case was complex. The media discussed the option of temporary nationalization.

The subsidiaries of the giants Gazprom and Rosneft are key players in Germany's energy infrastructure.
Subsidiaries of giants Gazprom and Rosneft are key players in Germany’s energy infrastructure (John MACDOUGALL/AFP/Archives)

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

Drafting a diagram on the corner of a paper, Buckhard Opitz is convinced that an alternative to Russian oil can be found for the oil refinery, a metal monster standing on the outskirts of the city, a hundred kilometers from Berlin.

According to him, there is a pipeline from the German port of Rostock, which can carry oil from other parts of the world. Poland could complete deliveries through the port of Gdansk.

“Unrealistic,” says Alexander von Gerstoff, given the logistical difficulties: Rostock cannot handle large enough tankers; Poland needs all its possibilities for its own diversification. And refineries in eastern Germany were designed to handle Russian oil with special characteristics.

“Various logistical and technology scenarios are being explored,” AFP said.

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

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