Berlin's Kazakh oil fiction is ending and the numbers don't add up

The Kremlin has announced that it will end a three-year old deal to deliver “Kazakh” oil to Berlin from the start of May, plunging Berlin into a fresh energy shortfall crisis as it scrambles to find an alternative source of crude to keep its fancy cars on the road.

Germany's government is presenting the suspension of Kazakhstani crude oil transit through the Druzhba pipeline as a manageable logistics challenge. In a deal cut in January 2023, Kazakhstan started to deliver oil to the key Schwedt refinery that supplies the capital with almost all its fuel needs after the EU banned the import of Russia oil completely at the end of 2022. Now those supplies will be stopped as tit-for-tat sanctions play out between Berlin and Moscow.

Berlin’s first option is to turn to Poland for help. Until now oil has flowed east to west through the Soviet-era Druzhba pipeline, but Germany is hoping to reroute imports north to south via existing smaller pipelines that connect Berlin to Polish oil terminals at Gdansk.

Can Poland actually replace the volumes?

The short answer is: not easily, not quickly, and possibly not fully.

Start with what Schwedt needs. The Schwedt refinery processes approximately 240,000 barrels per day at its maximum throughput, supplying around 90% of Berlin's fuel requirements.

The Kazakh volumes transiting Druzhba amounted to 43,000 barrels per day in 2025 — rising to nearly 60,000 b/d in the first quarter of 2026 as flows were ramped up. That represents roughly 17 to 25% of the plant's feedstock needs. It is not the majority of what Schwedt runs on, but it is a material share — and losing it just as the world goes into an Iran-induced energy shock is very bad timing.

Europe is already suffering from a growing gas crisis and spiking oil prices as the Gulf supplies dry up is only going to make it worse. Germany is particularly vulnerable, as energy prices have effectively doubled since before the Ukraine war broke out that has led to the dramatic deindustrialisation of the economy. A new petrol price shock will only exacerbate an already bad situation.

What can the Polish route realistically provide? The Pomeranian pipeline, which connects Gdansk’s Naftoport terminal with the oil hub at Płock and onward to Schwedt via the western section of Druzhba, has a stated capacity of 27mn tonnes per year — approximately 540,000 b/d in theory. On paper, the pipeline has more than enough capacity to replace the lost Druzhba volumes several times over.

The theory collides with reality on several fronts. First, current Gdansk deliveries to Schwedt are already running at approximately 1.2mn tonnes per year — a fraction of the Pomeranian pipeline's rated capacity, but also a baseline that already reflects real-world constraints: Naftoport's crude handling throughput, tanker scheduling, crude grade compatibility with Schwedt's refining configuration, and the logistics of moving volumes from port to plant. Scaling from the current baseline to cover the missing Druzhba volumes is not simply a question of pipeline capacity — it is a question of whether tankers, berths, pumping stations and crude grades can all be scaled up to meet the German demand.

Second, Schwedt's refinery configuration matters. As IntelliNews reported, you can’t just load up any refinery with any of the various blends of oil; its chemical make-up matters. More specifically, you can’t put a heavy, sulphurous oil (“sour oil”) into a refinery configured to process a light blend with few impurities and vice versa.

Schwedt was designed to process Russia’s premium Urals crude — a heavy, sour grade that flows through Druzhba — and has been progressively adapted since 2022 to handle a wider range of inputs. As not all crude grades are interchangeable, sourcing replacement oil at short notice from the global market is problematic. The restrictions on Middle East supplies by the Iran war adds to the cost and complexity of changing suppliers.

Third, Poland's own refinery, operated by Orlen (WSE: PKN) at Płock, competes for the same Pomeranian pipeline capacity. The pipeline is not exclusively dedicated to Schwedt and any significant increase in Schwedt-bound flows requires coordination with existing Polish users.

The bottom line on capacity: Poland has the pipeline infrastructure to replace the Druzhba volumes in principle. Whether it can do so at the required pace, with compatible crude grades, in a tight tanker market, without disrupting its own refinery operations — and at a cost that is commercially acceptable — is a different ball game. Germany's assertion that fuel security is not threatened is a statement about the long-run. The short-run disruption risk is real.

Was this ever really Kazakh oil?

Another point that is being glossed over in the whole saga is: was the “Kazakh” oil actually from Kazakhstan?

There is no pipeline connecting Kazakhstan to Germany. There is no direct physical route by which a barrel of Kazakhstani crude can travel from the Tengiz or Kashagan fields to Schwedt without transiting Russian territory. And even if you tried, that is a very long way – over 4,000km. The route would have to be: Tengiz, Kazakh trunk system, Atyrau, Atyrau–Samara pipeline, Russian pipeline system, Druzhba, Belarus, Poland, Schwedt/Berlin region. Note that about three quarters of this route crosses Russian territory, making the delivery of the so-called Kazakh oil heavily dependent on Russian transit which already sits uncomfortably with the 2022 EU oil sanctions.

In reality, Berlin was not sourcing actual Kazakh oil. It’s Russian oil. It is far cheaper and easier to do a swap deal. A barrel produced in Tengiz is simply renamed “Russian” and an equivalent barrel of Russian oil already in the Druzhba pipeline on the Russian western border, much closer to Berlin, is renamed “Kazakh.” The name change allows Berlin to ignore the ban on importing Russian oil and keep its Mercedes and Ferraris on the streets of the capital.

As part of the deal, the real barrels of Kazakh oil are exported south and west, not north, primarily through the Caspian Pipeline Consortium route to Novorossiysk on the Black Sea, and from there by tanker to global markets. Russia, simultaneously, exports crude oil west — including through the northern branch of the Druzhba pipeline – to Poland and Germany.

A lot of fuss has been made over the Hungarian and Slovakian exemption to the 2022 oil import ban that allows them to overtly import Russian oil via the Druzhba pipeline, but Germany has been doing exactly the same thing, except covertly under the cover of the Russian to Kazakh name change.

And it is not an insignificant amount of oil. Russian crude flows to Hungary and Slovakia, at roughly 8–9mn tonnes a year, are about four-times larger than the 2.1mn tonnes of Kazakh oil shipped to Germany’s Schwedt refinery. Berlin imports less than Budapest and Bratislava, but it is still the third biggest customer for direct imports of Russian oil in Europe.

Under the arrangement in place since 2023, Kazakhstan nominally delivers crude to the Druzhba pipeline entry point at Atyrau-Samara, and Russia nominally delivers the equivalent volume to Schwedt. In practice, the molecules flowing through Druzhba to Berlin are Russian molecules, produced in Russia, owned by Russian state entities. But on paper it is "Kazakhstani" oil – something that Brussels has chosen to turn a blind eye to.

Now the Kremlin is going to end the Kazakh swap deal. For the first time, Berlin must find genuinely non-Russian crude molecules, from genuinely alternative sources, routed through genuinely alternative pipelines.

Why has Moscow chosen to act now?

Russia has cited "technical issues" as the reason for suspending Kazakhstani transit from May 1. The move comes in the context of remarks made by Russian President Vladimir Putin earlier this month that if the EU intends to ban imports of Russian gas completely by January 1 next year, why doesn’t Russia cut off the gas supplies, especially LNG, itself now and find more reliable partners in Asia? The move is designed to deepen the gas crisis as Europe starts the restocking summer season with record low gas storage following the big freeze this winter. cutting off oil to Berlin now will pile more pressure on an already dysfunctional European economy.

Of course, the Kazakhs themselves are not happy about the change. Kazakhstan's energy minister offered a more specific suggestion: that the halt is "most likely related to the recent attacks on Russian infrastructure," referring to Druzhba row between Hungary and Ukraine following drone strikes on Druzhba pipeline infrastructure in January.

Ukrainian drone attacks on Russian pipeline infrastructure have been a mounting since last summer, specifically targeting Russian refineries, as Kyiv attempts to starve Russia of its oil and gas export revenues. More recently, the Armed Forces of Ukraine (AFU) have launched a sustained attack on Russia’s key oil export terminals at Primorsk and Ust-Luga, which have significantly lowered its export volumes. The Druzhba system has been hit multiple times during the war, but the January attack was by far the most damaging.

But the technical explanation alone does not fully account for the timing and target selection. Several other factors are in play.

The physical halt of oil flows via Druzhba was probably the trigger, but the nixing of the Kazakh deal comes in the context of the landslide victory of news Hungarian Prime Minister Peter Magyar who ousted the Kremlin’s best friend in Europe, Viktor Orban. That cleared the way for the release of a €90bn EU loan that will keep Ukraine in the war for another two years and the passage of the twentieth sanctions package that specifically tightens sanctions on Russia’s shadow fleet adding new pressure to Russia’s oil exports. The Kremlin’s decision to cut Kazakh exports is likely in retaliation to the new sanctions: one section of Druzhba has just been reopened by Bankova; another section has been closed down by the Kremlin.

The second factor is the Iran war's effect on global energy markets. With Brent above $100 and the Russian blend now trading at an astonishing $20 premium to Brent, the constriction in supplies caused by the Middle East conflict has vastly increased the Kremlin’s leverage via energy markets as the one major player that is largely unaffected by the conflict.

A disruption to the Schwedt refinery might have been easily absorbed in normal times, but suddenly the world has gone from an oil glut in 2025 to an oil shortage in 2026. Moscow's timing may reflect a calculated blow that will hurt the Germany economy more than at any other time in the last four years.

The third factor is the Schwedt refinery's ownership structure. Pre-war the refinery was majority-owned by a subsidiary of Russia’s oil major, called Rosneft Deutschland, but it was de facto appropriated by the German state after the war broke out, which has put the shares into trust since 2022.

The parent company, state oil company Rosneft (MOEX: ROSN), has complained bitterly but the shares remain in limbo as the German state has not formally nationalised the firm (which would be technically illegal unless Germany formally declares war on Russia) or sold the shares despite Berlin's stated intention to do so.

Like the frozen Central Bank of Russia (CBR) $300bn of reserves, Moscow formally retains ownership of the refinery while Berlin continues to dither on what to do with it. Pressuring the refinery's supplies is another lever Moscow is using to resolve the impasse.