Exclusive-German government sees problems with coal, oil supplies -document

© Reuters. FILE PHOTO: Industrial facilities of PCK Raffinerie oil refinery are pictured in Schwedt/Oder, Germany, May 9, 2022. The company receives crude oil from Russia via the 'Friendship' pipeline. REUTERS/Hannibal Hanschke/

By Markus Wacket

BERLIN (Reuters) - Germany's government is concerned about possible problems with the coal supply for power plants in the autumn and winter due to low water levels on the river Rhine and the oil supply in eastern parts of the country, a document seen by Reuters said.

Europe's biggest economy is trying to cut its dependence on Russian energy. However, weeks of critically low water levels on the Rhine river have disrupted logistics and added to Germany's energy headache as industry temporarily switches to more coal and oil due to a steep fall in Russian energy imports.

"Due to very reduced domestic shipping, accumulated coal stocks could quickly fall," a document entitled "Energy Supply Assessment," drawn up by the Economy Ministry and seen by Reuters, said.

"Additional storage sites which have been and are being procured in southern Germany will probably not be filled by winter," said the paper, referring to the southwestern state of Baden-Wuerttemberg, home to power plant operator EnBW.

It cited the low Rhine water levels which have reduced the volume of coal that can be transported by river barges.

A significant improvement is not expected, said the paper, and an overburdened rail system offers little relief.

On Wednesday, Germany's Cabinet approved legislation to prioritize energy transport on part of the country's rail networks.

Russian gas giant Gazprom (MCX:GAZP) has slashed gas flows to Germany via the Nord Stream 1 pipeline to 20% of capacity, citing technical issues. Berlin has called the move politically motivated, in view of Europe's sanctions on Russia over its invasion of Ukraine.

The document also said that oil supply could become a problem in northeastern areas.

The Schwedt and Leuna refineries will forego oil from Russian pipelines from the end of the year due to an EU oil embargo and this will lead to higher prices at the very least, said the paper.

Both the Leuna and Schwedt refineries could run at 75% capacity, said the document.

Schwedt supplies large parts of eastern Germany, including Berlin airport. Efforts to supply that area with refinery products from western regions could also encounter transport problems due to rail bottlenecks, said the document.

"High demand and scarce transport capacity in rail freight are leading to a challenging situation in oil logistics. Some products from refineries cannot be moved," said the document.