Federal government re-examines expansion of Rostock–Schwedt oil pipeline for PCK refinery

Blocked EU negotiations and raw materials policy background

Specifically, the funds in the course of drafting the 2026 budget are not to be used exclusively for the upgrading of the pipeline, but also for further measures to secure energy supply in northern Germany as well as for innovation projects. Should the modernization of the pipeline not be realized, the earmarked funds could – according to the ministry – be used for other projects. The previous federal government had earmarked up to 400 million euros for the expansion of the pipeline and the port of Rostock.

According to the Federal Ministry for Economic Affairs, negotiations with the EU Commission on the state aid required for the expansion are currently blocked. "Die Verhandlungen mit der EU-Kommission kommen derzeit nicht voran, da sich zunächst die Gesellschafter der PCK Schwedt zu dem Vorhaben der Ertüchtigung erst positionieren müssen," a ministry spokesperson explained ("Negotiations with the EU Commission are currently not progressing, as the shareholders of PCK Schwedt must first take a position on the upgrade project"). A corresponding funding application has been submitted to the European Commission for review, but approval has not yet been granted.

The background is the complicated ownership structure of PCK Schwedt: 54 percent of the refinery belongs to German subsidiaries of the Russian state-owned company Rosneft. Because of the Russia–Ukraine war, these Rosneft subsidiaries are under trusteeship and therefore under federal supervision. According to its own information, however, the federal government does not plan to nationalize PCK. The Ministry of Economic Affairs in Mecklenburg-Western Pomerania interprets the federal government's step as a technical reassessment and an adjustment of the funding framework.

Rosneft stake and trusteeship

The situation was further exacerbated on May 1, when Russia stopped the transit of Kazakh crude oil through the Druzhba pipeline to Schwedt – according to its own statements, for technical reasons. Roughly one-fifth of the crude oil processed at PCK had recently come through the Druzhba line. With the loss of this route, the pressure on the Rostock line continues to increase.

Die Linke member of parliament Christian Görke sharply criticized the development. He spoke of a "Sterben auf Raten" ("death by a thousand cuts" / "a slow death") for the refinery and warned that nationalization would ultimately be unavoidable. Görke had submitted the Minor Question that brought the reassessment to public attention. According to Christian Görke, the latest development amounts to a cancellation of the long-delayed pipeline expansion.

Criticism from the Bundestag and reaction from Schwerin

From the Federal Ministry for Economic Affairs, it was stated on this matter that "prinzipiell" ("in principle") one wanted to stick with the expansion of the pipeline. Negotiations on the state-aid-law requirements for an upgrade of the line are not currently being held. The so-called state aid procedure is currently on hold; PCK has been informed of this. Only once the shareholders of PCK Schwedt have formulated a position can the procedure be resumed.

It is unclear in which direction the reassessment within the Federal Ministry for Economic Affairs will go. In the end, the review could lead both to an accelerated expansion and to a redirection of the funds. Observers interpret the process as an indication that the federal government wants to readjust the transformation of northern German energy infrastructure – moving away from a single large pipeline toward a bundle of different measures.

What is certain: without an expansion of the Rostock line, the supply of the PCK refinery remains vulnerable. Should the EU Commission not approve the state aid or should the shareholders fail to take a position, the refinery – according to Görke – faces a slow decline. Until a decision is made on the future use of funds in the 2026 budget, the fronts between Berlin, Brussels, and Schwedt are likely to remain hardened.