Kazakhstan to supply 100,000 tons of oil in March to the PCK Schwedt refinery in Germany

Kazakhstan will supply 100,000 tons of oil via Russia's Druzhba pipeline to Germany in March for the PCK Schwedt refinery after it agreed commercial and legal terms with all parties involved, two sources familiar with the talks said.

Kazakhstan's Kazmunaigaz (KMG) oil company will supply the volume via the pipeline system of Russia's Transneft to the refinery, the sources said.

The volume will mostly be from KMG's share in the Karaсhaganak Petroleum Operating (KPO), the sources said.

The oil will be supplied to Rosneft Deutschland, which Germany had put under a trusteeship of the German industry regulator, the sources said. Rosneft still holds 54.17% of the refinery.

Germany plans to change its Energy Security Act to allow a quick sale of Rosneft's stake in the Schwedt refinery without the need for prior nationalization, according to a draft law.

Germany stopped Russian oil imports via Druzhba from January and has been working hard to try to secure supply for Schwedt from alternative routes.

"The federal government has continuously supported the procurement of crude oil quantities ... by the shareholders of PCK and will continue to do so," a spokesman for the refinery told Reuters in a written answer.

"This also applies to the ongoing negotiations between the oil companies concerned and the Kazakh side about additional oil volumes from Kazakhstan, for example those of the Rosneft Deutschland," the spokesman said.

German refineries in Schwedt and Leuna near Leipzig are supplied with non-Russian oil via Poland's Gdansk and Germany's Rostock. These seaborne supplies are not enough to provide full runs at both German oil plants linked to the Druzhba pipeline.

"According to PCK management, the refinery's capacity utilization averaged around 60 percent in January," the refinery's representative said.

Kazakhstan initially planned to start oil exports to Germany in January 2023, but negotiations were delayed as legal and commercial questions needed to be worked out, the sources said.

Rosneft, Kazmunaigaz, Transneft, KPO and Kazakhstan's Energy Ministry didn't answer Reuters requests for comment. Russia's Energy Ministry declined to comment.

Eni, which owns 8.33% in PCK Schwedt, didn't immediately answer a Reuters request for comment. Shell, which still holds the stake in the plant, declined to comment. 

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