ELS #Energy - Hacking of German Oil Infrastructure Eerie Reminder of Central European Supply Risks and Potential Price Effect

News today that Germany’s Marquard & Bahls commodity trading, logistics and storage conglomerate, with subsidiaries Mabanaft and Oiltanking, had suffered a severe hacking attack and that operations at its oil and fuel storage sites throughout Germany were frozen, raise alarm bells throughout continental Europe. While the German oil logistics and storage landscape is competitive – there are other companies which could increase flows, Marquard & Bahls is the largest one. Together with its peers it would be key in a situation where the tension between Russia and Ukraine would spiral out of control.

One of the main energy-related consequences of a full-blown war between Russia and Ukraine would likely be the halt of the southern leg of Russia’s Druzhba crude export pipeline, which passes through Ukraine. It goes on to deliver crude directly and indirectly to refineries in Slovakia, Hungary, Czechia, southern Germany and Austria. Significant investment has been made to increase alternative supply routes to Central Europe, not least since Russia’s 2014 annexation of Crimea. Crucially, however, the oil terminals along key German rivers and railway lines now hit by the hacker attack are meant to be part of that solution.

Marquard & Bahls is working to resume operations before the forecourts serviced by its logistics arm run dry. It is too early to say whether there is a connection to the recent hacker attacks on Ukraine and its institutions, but the timing is surely interesting and demonstrates potential holes in Europe’s preparedness and energy security should a significant geopolitical disruption close the southern Druzhba line. With crude and fuel prices high already, socioeconomic consequences would be both quick and stark.

#oil #energysecurity #energy

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