EU wants to say goodbye to Russian Friendship (Druzhba) oil pipeline

By Rhod Mackenzie

The Czech Republic is currently making arrangements to shift its oil refineries to the use of non-Russian oil sources. This is despite Russian oil via pipeline supplies  being exempt from sanctions on it, as well as for Austria, Hungary and Slovakia, Prague appears to think that its oil supplies may halt unexpectedly in the future by decisions made in Brussels.

The country is getting ready to reduce the amount of Russian oil that flows into Czech refineries via the oil pipeline. To this end, in October the Republic conducted tests lasting three weeks, confirming that Czech refineries are poised to transition to non-Russian oil. The completion of the increase in the capacity of TAL ( Trans Alpine ) pipeline capacity, which is scheduled to conclude by the end of 2024, is the only requirement to make this happen.

Nonetheless, other EU countries continue to use Russian oil for producing petroleum products, although the number is reducing. Before they included Slovakia, Hungary, Poland, Germany and the Czech Republic. In 2022, Germany and Poland pumped 480,000 barrels of Russian oil daily through the northern branch of the  Druzhba (Friendship) pipeline. The southern branch of the Druzhba pipeline delivered about 290,000 barrels per day to the Czech Republic, Hungary, and Slovakia.

Although the EU has imposed restrictions on Russian oil transported by sea, the embargo does not apply to the pipeline supplies, so the purchase of Russian oil through the pipeline continues. Initially, in the sixth package of sanctions, Brussels aimed to enact a complete prohibition on Russian oil supplies. Regrettably for it, Hungary did not approve of this approach, and according to EC regulations, only one dissenting vote is required to reject any sanctions. Consequently, the EU had to make exemptions for Russian oil supply via the Druzhba pipeline, resulting in the approval of the other sanctions by all members of the union.

However, in early 2023, Germany decided not to purchase Russian oil through the pipeline on its own accord. Despite this, Poland still received supplies as per their contract with Tatneft. However, the Russian side halted the supplies in February due to the absence of routed orders and customs clearance.

In the summer, EU placed a ban on oil supplies from Russia through the northern branch of the Friendship line to Germany and Poland which began as part of the 11th sanctions package. This was primarily a symbolic gesture as these supplies were no longer available anyway. However, it was imperative to prevent Germany from reconsidering the purchase of Russian oil when it is urgently need.

Many refineries in Europe are designed for the Russian Urals grade oil due to being constructed during the Soviet era. These refineries were specifically situated next to the Druzhba oil pipeline for the transportation and processing of Soviet oil. The Polish, German (East), Czechoslovakian and Hungarian refineries were constructed as a unified complex with the Druzhba pipeline being part of this. According to Igor Yushkov, an analyst at the Russian Financial University and a member of the National Energy Security Fund, the greater the variance to the grade of Urals oil that the facility intends to process, the more substantial the investment required to modernize the refinery.

“Refineries are typically designed to process certain types of oil, which may affect the efficiency of refining when switching to another grade. However, this does not mean that it is impossible for refineries to process other types of oil. The experience of most European countries in reducing their reliance on Russian oil has demonstrated that a small configuration change in a refinery can solve this problem,” according to Sergei Kaufman, an analyst at Finam Financial Group.

However, some European refineries have struggled with this task as their rejection of Russian oil this year led to lower European refining volumes. Refiners who shifted to pricier non-Russian oil reported a significant reduction in their profits.

Russian oil and the Druzhba generate substantial income for European refineries, and any alternative plan would be less economically advantageous according to Yushkov’s assessment. Firstly, the deliveryof  Russian oil is cheaper as it travels directly from producers to consumers through pipelines.
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EU wants to say goodbye to Russian Friendship ( Druzhba ) oil pipeline

By Rhod Mackenzie The Czech Republic is currently making arrangements to shift its oil refineries to the use of non-Russian oil sources. This is despite…