Schwedt faces mass layoffs due to problems at a local refinery after EU sanctions cut off its access to Russian supplies

The authorities in the German town of Schwedt want sanctions on Russian oil lifted due to growing problems at a local refinery that depended on Russian supplies, Politico reported on Friday, citing local officials.

The report focuses on Germany's fourth-largest refinery, Schwedt PCK, where Rosneft remains the majority owner. The facility, which supplies over 90% of the oil used by the city of Berlin, lost access to Russian crude in 2022 after Moscow halted pipeline deliveries to Poland and Germany due to EU sanctions.

Though the plant switched to alternate supplies, it has not returned to full capacity and currently operates at 80%, Danny Ruthenberg, chief of the refinery's works council, told the outlet. He warned the facility is now "in the red" due to having fixed operating costs and could be forced to begin layoffs if the situation persists.

Schwedt Mayor Annekathrin Hoppe told Politico the refinery's troubles threaten the entire town given that about 20% of Schwedt's 30,000 residents depend on it for their livelihood.

"The refinery is the reason the town exists," Hoppe said, adding that she would appeal to the federal government for action, including through resuming Russian imports.

"Of course we don't accept the war... but traditionally we have always had good relations with Russia."

Ruthenberg echoed the sentiment, saying renewed Russian supplies could stabilize operations. "When peace is there again, then you have to trade with Russia," he stated.

Russian energy exports to the EU dropped sharply due to sanctions and further declined after Kiev let a key gas transit deal expire in January. Brussels has since been pushing to phase out Russian energy imports altogether by 2028. However, countries such as Slovakia and Hungary oppose the move, while experts and opposition parties across the bloc are urging a return to Russian supplies, particularly since Moscow and Kiev resumed direct talks on a potential peace deal earlier this year.

"Pressure will definitely grow" on the German and EU authorities, Stefan Meister of the German Council on Foreign Relations told Politico, as "more voices from different companies... politicians on the local level demand returning to cheap Russian oil and gas." Sources in Brussels also told Politico that if Germany reversed course on Russian energy, other EU nations, such as Italy, Austria, Bulgaria, and the Czech Republic, would likely follow.

Moscow has repeatedly condemned Western sanctions as illegal and self-defeating, especially those targeting energy, pointing to price spikes in the EU following the initial measures against Russia in 2022. Russian officials have warned that the bloc's rejection of its supplies will force it to rely on costlier alternatives or indirect Russian imports via intermediaries.