EU proposes formal halt of piped Russia oil flows to Germany, Poland

12 May 2023 20:55

The European Union has proposed formalizing a halt of piped Russian oil flows to Germany and Poland.

The two nations have been allowed under a derogation of EU sanctions to continue receiving oil through the northern section of the Druzhba pipeline. Despite that, both already stopped taking crude via the link, making good on earlier pledges to scale back.

However, there is a proposal to end their carve out, according to documents seen by Bloomberg. The derogation had been granted when the EU decided to ban most imports of Russian oil last June.

While such a step would be largely symbolic given that the two nations already stopped, the cutoff itself forced several refineries to engage in challenging logistics to access alternative crudes. At least one of them, the PCK Schwedt plant near Berlin, has been forced to make less fuel for the region it serves.

Exemptions allowing flows through the southern branch of the link, which supplies Hungary, Slovakia and the Czech Republic, will remain in place.

Germany and Poland averaged about 480,000 barrels a day of imports via Druzhba in 2022. Those to the three nations on the southern leg averaged almost 290,000 a day, a level that dipped very slightly this year.

The proposal to end the derogation would be part of the EU’s 11th package of sanctions following Russia’s invasion of Ukraine. It would need the backing of all member states and could change before that happens with talks ongoing.

Poland had been pushing to sanction the northern Druzhba route as it would have otherwise been legally difficult for Warsaw to terminate its contracts and stick to a pledge it made last year to halt Russian oil imports. The nation terminated its last supply contract in spring after Russia halted shipments in February.

Since supplies of Russian crude halted, a tiny amount of Kazakh oil has gone through the Druzhba. There is no discussion about banning that, as imports originating from other third countries, including if the oil transits via Russia, are allowed.

To clarify that point, the EU’s proposals also include carve-outs that allow providing services needed to enable the purchase, import or transfer of oil originating in Kazakhstan and maintain the Caspian Consortium Pipeline (CPC).

The main focus of the new package is to crackdown on the circumvention of restrictions, with proposed measures also including banning ships that have breached prohibitions from entering EU ports, targeting vessels that switch off their navigation systems, and tools to restrict trade in sanctioned technologies that are getting to Russia via third countries.

Caliber.Az

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