Crude awakening: the German town on the frontline of Russian sanctions

Ursula Patz opposes Russia’s war on Ukraine. But she is also firmly against anti-Moscow sanctions that she says will imperil her town.

“Sanctions that end up hurting you more make no sense,” the 76-year-old said. An oil embargo “won’t harm Russia — they’ll just sell the oil to someone else”.

Patz worked for 16 years at an oil refinery in the north-east German town of Schwedt that risks becoming collateral damage in Europe’s campaign of punitive measures against Russia.

At issue is the EU’s ban on imports of Russian oil, which is designed to deprive President Vladimir Putin of revenues to fund his war in Ukraine. The measure, which comes into force on January 1, has broad support in Germany but has thrown the future of Schwedt’s refinery into doubt.

“People here feel they are a pawn that is being sacrificed in some game,” said Jens Koeppen, a Christian Democrat MP who represents the town.

At issue is the refinery’s reliance on Russian oil. It sits atop the “Druzhba” pipeline, which carries crude some 4,000km from Almetyevsk in central Russia directly to Schwedt. And the plant is configured to work with Russia’s main high-sulphur “Urals” grade of crude.

What complicates matters most, though, is that it is Russian-owned: the Kremlin-controlled oil company Rosneft controls 54 per cent of its shares and has little interest in processing crude from other sources.

Many in Schwedt fear the refinery, known as PCK, will be forced to close if it loses access to Russian oil. “That would be a nightmare scenario,” said the town’s mayor, Annekathrin Hoppe. “People here fear for their existence.”

Schwedt’s biggest employer, PCK has a workforce of 1,200. Hundreds more work in ancillary services, making pipelines, heat exchangers, pumps and cooling units for the plant, said Hoppe.

“All those jobs would be affected, and all those people have families,” she said. Furthermore, “around 80 per cent of the town is supplied with district heating from PCK’s power plant”. It is still unclear, she said, how homes would be heated if it goes out of business.

The people of Schwedt fear a repetition of the economic dislocation in the region after German reunification in 1990. “They’re facing a second deindustrialisation of east Germany,” said Koeppen. “And they won’t take it lying down.”

Schwedt reflects the region’s highs and lows. The town was almost completely destroyed in the Soviet advance during the second world war. Then in the 1950s young people from all over East Germany converged on Schwedt to rebuild the town and erect the PCK, short for “petrochemical kombinat” or combine.

Schwedt came to embody the close ties between Russia and the GDR. Local newspapers from the 1960s conveyed the excitement when PCK was connected to the newly-built Druzhba pipeline in 1963.

“The oil has arrived!” said a front-page headline in the PCK publication “Young Builder”. “Glory and honour to the builders of the longest pipeline in the world!”

Druzhba, which continues to provide a quarter of Germany’s crude oil, always had positive connotations for Patz. “It means friendship in Russian — such a lovely word,” she said. “It means something good.”

Soon after it came online in 1964, PCK established itself as the region’s main supplier of petrol, diesel, jet kerosene and fuel oil. Big consumers — such as Berlin’s international airport — still depend on its products.

So there was widespread anger in Schwedt when Germany signed up for the embargo. Some people wondered why it had not followed the examples of Hungary, the Czech Republic and Slovakia, which are also linked to Druzhba but negotiated temporary exemptions from the import ban, citing their lack of alternatives to Russian oil.

“People just can’t understand why Germany voluntarily decided on this embargo,” said Hoppe. “Everyone condemns this war, but people are also fighting for their jobs.”

Discontent has been seized on by populists on the right and left. The hard right Alternative for Germany has put up posters in the town with the slogan: “If PCK dies, so does Schwedt”.

Chancellor Olaf Scholz insists the government is working to safeguard PCK’s future. Officials have promised that it will continue to process oil next year and in 2024 and that jobs will be protected.

To that end they are exploring alternative ways of supplying the refinery, principally via a pipeline from the northeastern port of Rostock.

But Koeppen, the MP, said that won’t solve the problem. The pipeline can ship only 19,000 of the 32,000 tonnes a day of oil that PCK needs, he said.

“Rostock port is also not deep enough to accept oil tankers,” he said. The oil would have to be imported into Wilhelmshaven on the North Sea and transferred on to smaller ships, he added. “And we don’t have the ships.”

PCK also hopes to receive oil from Kazakhstan, and is looking into supplies via the Polish port of Gdansk. “But the Poles say they don’t want to supply us while the plant is still owned by Rosneft,” said a worker at PCK, who declined to be named. “And we can’t just brush that aside.”

Longer-term Berlin wants to secure PCK’s future by transforming it into a “green refinery”. Two companies — Enertrag, a wind energy firm, and Verbio, a biofuels producer that already has operations in Schwedt — have expressed an interest in taking stakes in PCK.

Hoppe said with their involvement, the refinery could produce “green hydrogen” which could be combined with CO₂ captured from the atmosphere to make sustainable synthetic fuels — including “e-kerosene” for planes.

But it will take years for PCK to make the transition. Meanwhile, an oil embargo looms that could have fateful short-term consequences for the refinery.

“Three months have passed [since the embargo was agreed] and we’re still hearing the same promises,” said Hoppe. “Time is running out.”