Mero plans new oil pipeline link with Germany

Representatives of French oil major Total are due in Prague in March to discuss construction of the new oil pipeline to Litvínov

Energy & Green Biz
Pavel Matocha | 23.02.2011
The planned pipeline would also open access to oil deliveries to northern European ports

The refineries in Litvínov, North Bohemia, and Leuna in the German state Saxony-Anhalt share a similar significance in Europe’s oil pipeline network: Litvínov is where the southern branch of the Druzhba pipeline from Russia ends and Leuna is the refinery at the end of the northern branch. A pipeline connecting the refineries would mean that oil supplies could be routed between the refineries in case of problems on either of the branches of Druzhba.   

Jaroslav Pantůček

Mero, the Czech state-controlled oil pipeline operator that owns the IKL (Ingolstadt-Kralupy-Litvínov) pipeline and the Czech section of the Druzhba, is conducting intense negotiations with the French oil major Total — the owner of Leuna refinery — on the construction of the pipeline between the two refineries. Mero general director Jaroslav Pantůček has confirmed to Czech position that Total representatives are due to come to the Czech Republic in March to discuss the various options for the implementation of the project.

“We have been working on this project for several months. Now we will discuss which model would be most advantageous for both sides,” Pantůček said. A pipeline between Litvínov and Leuna would not only to connect the north and south branches of the Druzhba pipeline, it would also serve to connect oil container terminals in the northern German ports of Gdansk and Rostock with the terminal in Trieste on the Mediterranean.           

In the event of supply problems via the Druzhba, the Leuna refinery could source supplies from the TAL pipeline (which transports deliveries from the container port in Trieste, Italy), via the IKL — which would mean that the Czech Republic would collect transit fees. Similarly, with Leuna’s connections to the northern ports, the prospective pipeline could serve as a guarantee of supplies to the Czech Republic in the event of problems with the TAL pipeline.   

A question of energy security

The Czech Republic and the other states of Central and Eastern Europe face the prospect of Russian oil supplies via the Druzhba coming to a halt within the next 10 years, which poses fundamental questions for European energy security. Similar with gas, Russia is looking to increase direct oil deliveries to Europe via the sea, bypassing transit nations — principally Belarus and Ukraine. Part of this strategy is the construction of the Baltic Pipeline System II from the Druzhba pipeline on Russian territory to Ust-Luga on the Russian shores of the Gulf of Finland. The new Baltic pipeline is due to be completed in 2012.

The Druzhba, officially the longest oil pipeline in the world, is aging and requires major renovations on certain sections in Russia. Doubts remain that Russia is committed to making these repairs. Approximately 70 percent of Czech oil imports are delivered via Druzhba.

In order to increase security of oil supplies to the Czech Republic, Mero has for several years been attempting to purchase a stake in the TAL pipeline through which about 30 percent of Czech oil imports are shipped. The pipeline operator is looking to buy a stokehold of around 7 or 8 percent in line with amount of TAL’s capacity used for delivery of oil to the Czech Republic. At one point reports emerged that Shell, which holds a 24 percent share in TAL would be willing to sell, but this did not happen.

TAL has nine shareholders — all oil companies. A source in Mero’s management earlier told Czech Position that the even the companies that don’t use the pipeline to ship their own oil don’t want to sell their stakes because their part ownership of the pipeline enables them to monitor the operations of their competitors. 

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