The Polish authorities have asked the European Union to intervene on the Russian pipeline Druzhba, through the southern branch of which Hungary, Slovakia and the Czech Republic continue to receive oil. Poland insists that its intention to refuse supplies through the northern branch of Druzhba puts local oil refineries in an unequal position with competitors, mainly from Hungary, therefore, together with Germany, Poland wants to start a change in the tariff policy for Russian supplies, which will equalize in terms of Polish and Hungarian companies. Speaking of which writes Bloomberg, citing a report by the Polish Ministry of Climate.
Germany and Poland announced in the summer that they were ready to abandon the pipeline from Russia, which they received through the northern branch of the Druzhba pipeline, both countries agreed to take this step as a sign of solidarity with Ukraine. The authorities also wanted to reduce Moscow’s revenue from oil supplies in this way, but these intentions were not legally registered. Now, on the eve of the deadline, Poland is asking the European Union to formalize sanctions against the Druzhba pipeline: this will allow the authorities to terminate all contracts with Russia on the basis of the force majeure clause and avoid sanctions.
“In our view, the introduction of further sanctions, including against the northern branch of the Druzhba pipeline, requires adequate rules at the EU level. Poland is cooperating with Germany on this issue,” the Polish ministry said in a statement.
Poland is also worried about the prospects of energy company PKN Orlen, which risks losing its position due to unfair competition in the region with Hungarian company MOL, which will continue to receive cheap Russian oil through the Druzhba pipeline. The Polish agency believes that the EU must ensure a level playing field among European companies through a “level playing field” for the Russian oil pipeline.
In addition, Russian oil to Poland has already been replaced by suppliers from Saudi Arabia and Norway, at the moment the level of dependence on Russian oil is estimated at 30%. Poland has already abandoned sea supplies and now wants to abandon gas pipelines, but this requires EU assistance. The German authorities, as noted by the agency, also await progress on this issue from the EU, as local authorities are regularly criticized for the decision to voluntarily abandon oil through Druzhba. Last year, Russia supplied about 720,000 barrels a day via Druzhba, most of which went to Poland and Germany.
The absence of a reaction from the European Union will allow Poland and Germany to continue buying Russian oil through Druzhba, the agency notes, despite the promises made in the summer. Poland’s Orlen had previously even requested the opportunity to replenish its storage facilities with oil from Druzhba in order to maintain transit. The agency reminds that the introduction of sanctions against the northern branch of the Friendship will require another unanimous vote at the level of national leaders, but the introduction of special tariffs that could equalize trading conditions for Polish and Hungarian companies does not require the ‘unanimity.
Starting December 5, a cap price mechanism will come into force with regard to offshore deliveries of Russian oil, according to which companies from countries that have joined the mechanism will not be able to buy Russian oil at prices above the established limit. Plannedthat these measures would drastically reduce Moscow’s oil revenues, which would put pressure on the Russian authorities and make war against Ukraine more difficult. At the moment the maximum price is still being discussed, but it is expected at 65-70 dollars a barrel.
