Poland seeking German support to sanction Russian Druzhba oil pipeline

Poland is seeking German support to slap EU sanctions on the Polish-German section of the Druzhba crude pipeline so Warsaw can abandon a deal to buy Russian oil next year without paying penalties, two sources familiar with the talks said.

The sources also said the pair are nearing an agreement for Poland to coordinate seaborne oil supplies to Germany via Gdansk and part of Druzhba to facilitate Poland’s purchase of the Russian-owned Schwedt refinery in Germany.

EU to stop buying Russian oil via maritime routes

The EU has pledged to stop buying Russian oil via maritime routes from Dec. 5 but Druzhba is currently exempt from sanctions. That presents a problem for Polish refiner PKN Orlen which has a long-term deal to purchase Russian oil via the pipeline and would need to pay penalties to break the contract.

If the EU were to impose sanctions on Druzhba – or at least its northern section supplying Poland and Germany – both countries would be able to get out of their Russian oil importing commitments penalty-free.

The southern section of the pipeline supplies Hungary, Slovakia and the Czech Republic which, unlike Poland and Germany, would struggle to diversify their oil imports.

Poland-Germany talks on Russian oil pipeline

According to the sources, the Polish climate ministry and German economy ministry are in the final stage of talks on a memorandum of understanding on oil logistics, which could unlock non-Russian flows and help Poland’s top refiner pursue its interest in Schwedt.

Germany remains committed to not using Russian oil from 2023 and is working on a solution with Poland to secure the supply of Schwedt, a spokeswoman for the economy ministry in Berlin said on Friday. The Polish climate ministry was not immediately available to comment.

Germany has put Schwedt under a six month trusteeship, stopping short of nationalising the refinery, and is seeking ways to supply it with oil.

Obligations under current contracts with Russia

Poland and Germany promised in spring to try to end Russian oil imports via Druzhba’s northern leg by the end of year but Orlen remains tied to its contract with Russian oil and gas company Tatneft.

The Polish refiner has nominated supplies for Druzhba for 2023 as stipulated by the contract but these would stop if the pipeline is hit by sanctions, one of the sources said.

Orlen has already cut its reliance on Russian oil to 30% of its requirement, replacing it with deliveries from Saudi Arabia and Norway among others.

Kommersant newspaper reported earlier this month that Orlen had submitted an application to the Russian oil pipeline operator Transneft for the supply of 3 million tonnes of oil to Poland through Druzhba in 2023.

Control over Schwedt, which also supplies western Poland, would boost Orlen’s refining capacity and control over the flows of oil and its products in the region with assets in Poland, Czech Republic, Lithuania and Germany.