Conoco German refinery wins permit for upgrade

* Refinery want to produce more diesel for U.S.

* Relies more on Russian crude for feedstock

FRANKFURT, July 6 (Reuters) - The Wilhelmshaven oil refinery in northern Germany, operated by Houston-based ConocoPhillips (COP.N), has obtained an important permit for an upgrade, a local official said on Monday.

The upgrade will be for producing more diesel for export to the United States and less fuel oil for the domestic market, and to help refine the Russian crude which the 260,000 barrels per day plant was increasinly running, the official said.

A second permit must still be obtained for emitting water into the Jade river but that was likely to follow, said the offical of the Oldenburg-based trade and industrial inspectorate in Lower Saxony state.

"The environment permit was granted and communicated to the operator on July 3," said Ralf Regensdorff, deputy head of the approvals department.

The water permit must be given by another authority but it had sounded positive during joint consultations, he said.

The permit from the Oldenburg authority implied new equipment has been screened and approved under safety and environmental aspects, after the operator last August said it would like to put in new installations, including a hydrocracker and diesel desulphurisation facilities.

The authority had to assess whether air quality or birds and wildlife would be impaired by the plans, which were estimated to cost around 2 billion euros ($2.80 billion). A local media report said ConocoPhilipps was due to decide at the latest in October about whether to go ahead with the investments.

"It would be good for local jobs and because it would strengthen Wilhelmhaven as a refinery location," Regensdorff said.

(Reporting by Vera Eckert, editing by William Hardy)