Poland, Germany seek EU sanctions on Russian Druzhba oil pipeline

Both countries hope to get out of oil importing commitments penalty-free

WARSAW:

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 was 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.

The EU has pledged to stop buying Russian oil via maritime routes from December 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. 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 .

Published in The Express Tribune, November 27^th, 2022.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.