Kazakh oil flow to Germany seen intact with Druzhba issue resolved, sources say

A horse grazes near an oil drilling rig of OzenMunayGaz company in Zhanaozen in the Mangystau region, Kazakhstan, November 14, 2023. REUTERS/Turar Kazangapov Purchase Licensing Rights

WARSAW, May 24 (Reuters) - Pipeline operators in Poland and Russia agreed on a solution that will allow Kazakh oil transit to Germany to continue, removing a risk that it would stop in June, sources familiar with the matter told Reuters.

Transneft warned Kazakhstan in April that its oil transit to Germany could stop due to an impasse in certifying oil flow meters in Poland, required by June 5.

Polish state-owned pipeline operator PERN had concerns it could breach Western sanctions against Russia, Polish sources familiar with the situation said earlier this year.

PERN, Russia's state-controlled Transneft and Germany's PCK Schwedt refinery agreed that a non-Russian company will service the oil flow meters on the Polish part of the Druzhba pipeline, sources in Poland, Germany and Russia said.

A Slovak company will provide metering servicing for the Polish portion, removing the sanctions exposure to PERN. The meters need to be certified periodically to meet Russian standards. Transneft's warning to Kazakhstan was a reminder of the landlocked country's reliance on Russia for its exports, with most of Kazakhstan's flow of 1.5 million barrels per day, or 1.5% of global supply, going via various Russian pipelines.

While the flow is relatively small, expected at 1.2 million metric tons of oil this year, it has helped Germany to not rely on Russian oil, a pledge Berlin made in 2022 following Russia's invasion of Ukraine.

Kazakhstan has extended the contract to supply the Schwedt refinery until the end of the year, the Kazakh state oil company KazMunayGaz (KMGZ.KZ), opens new tab said on Tuesday.

A PERN spokeswoman said the company was working with contractors to find a solution that will be in line with the existing laws.