This article is a little rambling and technical since written by an oil expert but it would be difficult to find a better one explaining clearly the absurdity of the current European energy policy.
Economic suicide is a short way to describe it but what does it mean on the ground?
It takes 15 years to build a nuclear reactor so Mr Macron has a solution for 2037+. But Germany plans to get rid of Russian oil by the end of this year. Here's what it really means.
Germans ´schwedt´ hard for Russian oil
´Krautensuiciden´:
by Jorge Vilches for the Saker Blog
Germans will soon passionately conjugate a very strange new verb amongst themselves, the infinitive form of which is “ to schwedt ”. Of course, all sorts of ironic phraseology will emerge in the blogosphere with creative commentariati wondering whether “to schwedt or not to schwedt”… or millennials surely indicating to “chill it, don´t schwedt it ”…
So, you may wonder what exactly is this ´schwedt´ thingy
about ? Well, it all starts with Schwedt, a small greyish-dull
industrial town in North East Germany right next to the Polish border –
it doesn´t get much greyer than that – which is now getting ready for no
more and no less than…(drumroll please)…sudden World Fame… or…”GAME OVER”.
Traffic today still continues to drive-by Schwedt gloriously
unattentive with visitors naïvely unable to focus on anything special.
But savvy technical buzz circles silently have it that the famous
Schwedt Refinery – in a matter of weeks – will turn into the Mother of All Engineering & Political Battles ever
that will define the future of Germany and Europe vis-á-vis the
stubbornly desired banning of Russian oils. If this battle were lost (
or partially lost ) many firmly credible experts solemnly insist it
would have irrevocable existential consequences with European countries
turning into almost failed states. But then the question arises: Is it
really possible – or even believable — that Germany (!) could
actually fail in this essential Schwedt Refinery project it has set up
for itself with absolutely no need ? How would it happen ?
Well, it should happen because only discontinuous and/or non-viable
and/or variable-quality blends of unvetted yet far more expensive new
oils are to be found as substitutes for constant, fully-proven
all-around compliance of Russian Urals oil that all Europe enjoys today.
Or also because of the subsequent failure of the refinement process for
such yet non-existent and only theoretically viable non-Russian blends
supposedly to be batch delivered (!) by still un-named third parties
upon which Germany would necessarily entrust its existence. Instead,
compare that to HUGE, smooth and constant,pipeline delivery of high
quality Russian Urals feed 24x7x365 already processed by European
refineries swiftly and reliably into excellent final products at an
unbeatable un-subsidized price. Accordingly, the distillates to be
possibly delivered (or not) by the Schwedt Refinery with non-Russian
feedstocks may mean either World Fame or GAME
OVER. Failure could also come about even assuming that vendors were able
to supply enough and continuous seaborne batch quantities of reasonably
viable oils. Because there might also not be enough fully dedicated handling,
storage and/or logistics capacity at Baltic ports to unload and/or
adequately deliver to a very far away Schwedt. Other logistical and
batch-related factors could also go wrong. Made-In-Russia will
be missed. For example, the Urals blend homogenous quality &
quantities, the price, and the smooth 24x7x365 Druzhba feed. So let´s schwedt it, shall we ?
the “Battle of the Schwedt”
Many historians attribute to Mark Twain the saying: “History does not repeat itself but it does often rhyme.”
At any rate, the Battle of the Bulge defined Germany´s defeat and the
end of World War 2. Now, the Battle of the Schwedt will define the
future of the world, but only if Western Europeans are able to avoid
triggering World War 3, something that unfortunately is definitely in
the cards. Meanwhile, small-town Schwedt is home to Germany´s most
politically important refinery ( without Schwedt, no Berlin,
okay ? ) which has been connected to the Druzhba pipeline for many
decades smoothly and continuously bringing in precious Urals oil from
Russia to process into many different distillates of excellence. So much
so that the Schwedt Refinery all by itself today provides fuel to
almost all filling stations in Berlin… as well as to the surrounding
huge state of Brandenburg the 5th largest in all of Germany… plus also to the Berlin international airport… plus areas of Western Poland…
You do follow the importance of having a smooth, high quality, un-expensive operation at the Schwedt Refinery no ?
Well all that is soon about to drastically change as Germany
apparently wants – at all costs — to stop importing the excellent,
cheap, reliable, decades-proven, fully vetted, well-delivered, and most
successfully processed and refined Russian oil. And even if the new and
still unknown vendors were to duly coordinate themselves (?) to
continuously deliver constant HUGE quantities and quality of new
non-Russian blends of experimental crude oils…and even if the Baltic +
Schwedt infrastructures were able to deliver exactly per requirements…
still the Schwedt Refinery must also perform 100% despite the forcefully
needed, mind-boggling modifications to adapt it to new and fully
unexpected non-Russian feedstocks. Ref #1 https://www.zerohedge.com/markets/opec-ministers-warn-no-increase-supply-coming-online
keeping score
Be that as it may, to follow the European oil & gas game, there
is no longer need to monitor what´s going on throughout all of Europe.
Neither is it necessary to even monitor the group of countries with the
most important economies. Nope. No need either to follow what´s going
on, say, throughout Germany as the EU´s most important economy. No, none
of that is needed anymore. Just follow closely what´s going on at
Schwedt and the rest no need to schwedt it. Because if Schwedt
doesn´t make it, Berlin & surroundings will break it, Germany will
grid-lock, the euro currency will become elegant and colorfull wallpaper
just like the 1920s Papiermarks, and the rest of Europe will go down
the drain into an oblivion spiral. So, clear enough, the events at
Schwedt will be the perfect indicators of the overall future. And if
someone does not happen to like what´s happening, they´ll probably have
to schwedt it anyway.
Ref #2 https://www.nsenergybusiness.com/projects/pck-oil-refinery/
´Krautensuiciden´ (Goethe-approved)
Well, for starters, everything is very secretive and really up-for-grabs. Problem #1 is that this is not an
engineering project, it´s 99% political and with no technical backstop,
period. Actually, and in more than one sense, both basic engineering
and economics 101 fully oppose it. So being 99% GEO-political in nature (
you still follow ? ) one possibility is that we cannot know many
details of the plan because politicians do not have one, just wishful
hissy fits.
Or, Problem #2 it may just be a back of the envelope idea that no one
– literally – is aware of what any of the possible proposed “solutions”
or outcomes would mean. Pretty much like a bunch of teen-age bullies
would plan their attack onto their own teachers at the high school
parking lot. Bear in mind that this “idea” means that German and
European costs at large will increase unbelievably, to the point of not
being competitive even amongst neighboring countries.
Problem #3 is internal opposition hindrance, splitting the matter in
two camps. Because it is very hard to accept that no clear-thinking
minds remain anywhere in Germany and/or Europe for that matter. Oh, by
the way, the Schwedt refinery is majority-owned by Russian state-owned
company Rosneft not supposedly willing to refine non-Russian oil.
Problem # 4 is that, per Bloomberg… ” Berlin reportedly aims to find new suppliers* to substitute for Russian oil and resolve logistical problems* within six to seven months”. And then adds the killer phrase. “The measure will apparently be adopted whether or not the EU reaches a consensus on a Russian oil embargo.” I
attest to the fact that many other sources besides Bloomberg repeat
exactly the same wording rigorously transcribed above as if a
confidential secret press release had been distributed. Who knows,
possibly it was…
But whatever the communications approach adopted, it means that
German politicians now in charge would want to fully work against
Germany´s own best interests no matter if the EU wisely decides to
postpone the practical joke of announcing it will ban the import of
Russian oil… just simply because it cannot do that. It´d be mission
impossible.
So I propose to coin the idiom ´Krautensuiciden´ as a new German term that Goethe himself would have approved.
Ref #3 https://www.rt.com/news/555542-germany-deadline-drop-russian-oil/
Option (3)
The now-famous Option (3) means the requirement to fully and
definitely modify/retrofit all the Schwedt Refinery´s internal processes
to enable the refinement of non-Russian oil blends which would now be
received from multiple yet unknown experimental vendors that would
supposedly continuously unload batches at the Wilhelmshaven &
Rostock & Gdansk ports terminals in the Baltic Sea. Instead, today
the Druzhba pipeline elegantly, silently and reliably delivers the
extraordinary Russian Urals blend 24x7x365 to German satisfaction and in
huge amounts while the Schwedt refinery processes and distills to
perfection without any need of modifying or retrofitting anything there
Heaven forbid .
So you now understand why I coined the term ´Krautensuiciden´ ? Ref #4 https://thesaker.is/why-russias-oil-ban-is-impossible/
So Schwedt Refinery Option (3) means to modify it for a blend of
different non-Russian oils…and with no possible “toggle switch” to
convert from one type of non-Russian oil blend to another…No meaningful
contamination possible !! We´d have a forceful life-long linkage between
one vendor and its supposedly constant, homogenous and very large oil
deliveries, which would be different from other vendors and their
supposedly also constant deliveries made to other EU refineries
different from Schwedt. There is NO possible interchangeability here…So
each refinery would have it´s own specific oil blend now, which means
separate, isolated, dedicated storage and delivery means. Bloomberg adds
“ German authorities reportedly plan to use an old pipeline* linking the Schwedt refinery to the northern port city of Rostock, but that would require an upgrade* for the infrastructure, which currently only has the capacity to meet 60% of the facility’s needs. Oil can be delivered to Rostock* from a national reserve, located near other Baltic ports, i.e. Wilhelmshaven*.” Rostock
may also supply other key refineries such as Leuna (Leipzig) and Plock (
Poland ). What is not explained is the tons of modifications and
investments that have to additionally be made both at
Rostock + Wilhemshaven + Gdansk ports which will be addressed later
herein as much as possible in view of all the unknowns.
There is a lot to unpack from these 2 brief paragraphs from Bloomberg et al, so allow me to parse them out slowly.
- “new suppliers” means unvetted,
experimental, not-coordinated, variable, probably only very partial
small suppliers, with dozens of never coordinated and variable business
associates at each and every single stage of the project from beginning
to end from well-head to Schwedt Refinery. Russian sourcing is the
opposite.
This means to find, negotiate, plan for, test, certify, contract & schedule fully compliant Russian-oil substitutes.
- “logistical problems” means all of what is explained throughout this article (and more) including References.
- “old pipeline” means a 200 km sometimes
partially buried heavy structure built with obsolete materials and
technology commissioned in 1963 many times patched-up already and most
probably unable to be “pigged”-inspected properly or meaningfully, let
alone be upgraded as needed. This 60-year-old Soviet-era structure most
probably cannot be “fixed” either or revamped or retrofitted or
pressurized as really needed by 21st. century standards. Lots of skeletons hanging inside many closets after several decades, now to be opened.
- “Rostock” is a not-fit-for-purpose port
with only tanker berth No. 3 which accepts crude oil so handling &
capacity is now very limited and thus also needs upgrading and
retrofitting of equipment plus dedicated facilities
including storage, handling and delivery capabilities. Also, Long Range
(LR) 2 vessels are the maximum size accepted by this Rostock berth, thus
limiting crude unloading volumes by each vessel.
Ref #5 https://ihsmarkit.com/research-analysis/impact-of-the-russia-ukraine-crisis-on-full-shutdown.html
- “Wilhelmshaven” is a larger deep-water
much better furnished port for inbound seaborne deliveries located some
400 km. away from Rostock port by land and 1000 km away by boat which is
not anywhere “close-by” .
Gdansk is an equivalent and alternative well-equipped port but located in Poland 600 km. away by land.
Still, Gdansk would need to undergo improvements similar to Wilhemshaven adapting to Rostock new needs.
- “Schwedt” is the refinery that processes
and distills all sorts of fuels and other products. By the required
Option (3) it needs modification of new feedstock lines and
infrastructure, an atmospheric distillation facility, a vacuum
distillation system, a cat-crack unit, a visbreaking facility, an
alkylation unit, a catalytic reformer, an isomerisation unit, and an
ethyl tertiary butyl ether (ETBE) facility. Plus brand new storage
facilities + handling equipment for Rostock feed to substitute the
24x7x365 smooth Druzhba pipeline. Not easy to do all that in 6 months
(!)… rather 6 years. Contractors and third parties everywhere. I foresee
plenty of claims & lawsuits.
PLUS all sorts of sensors, software & firmware modifications or
possible purchases of new stuff (!!) which mean that the IT Department,
just for oversight purposes, most probably will have to hire new
personnel (most preferably grey-haired if available ! ) and contract
third party vendors… all of that in 6 months time…while all of Europe
does the same
But there is yet FAR more regarding enormous logistical challenges
for unloading, storing and later delivering unexpected far larger
quantities of seaborne batch feedstocks… and subsequently distributing
such to the refineries where they are needed… Because the Russian
Druzhba pipeline supplied both an extraordinary quality and also an
incredible non-stop quantity of Urals feedstock oil. So
now such volumes have to come from different sources, not just one. And
that is why Gdansk and Wilhelmshaven step into the act. Accordingly,
Rostock port facilities on the one hand do need to be deeply modified to
both (a) receive larger inbound seaborne batch feedstock deliveries
from abroad and (b) store & handle adequately (c) deliver as
needed.… But still Rostock terminals need to receive yet more volume
from Wilhelmshaven + Gdansk. So that means that both Baltic ports in
turn also need to be modified to receive and store larger imported
seaborne batch but ALSO to deliver adequately to the Rostock terminal.
But that would still not be enough, so internal deliveries of oil
feedstocks would come to Rostock from yet other sources via inland
waterways + rail + road inbound and also to Wilhemshaven and Gdansk
terminals… and even to Schwedt.
Summary of the ´Krautensuiciden´ agenda
The Schwedt Project faces 9 + 2 highly challenging, simultaneous & parallel projects all to be executed in 6 months.
- Wilhelmshaven + Gdansk : dedicated storage + equipment for frequent inbound seaborne batch deliveries
- Wilhelmshaven + Gdansk : dedicated logistics for outbound deliveries to Rostock port storage terminals
- Rostock : berth revamping for larger seaborne inbound oil tankers from Wilhelmshaven or elsewhere
- Rostock : dedicated storage facilities + handling equipment for larger, more frequent seaborne batches
- Logistics for internal delivery via inland waterways + rail + road inbound to both W. + R. storage terminals
- Rostock port – Schwedt Refinery: pipeline upgrade & revamping + modifications to receive Rostock feed
- Schwedt Refinery: new oil feedstock definition, testing and vendor selection, approval, certification & contract.
- Schwedt Refinery: retrofit and revamping modifications per Option (3) described above.
- Schwedt Refinery: enhanced storage facilities + handling equipment for large & frequent batch deliveries
Actually it´s 11 (eleven) simultaneous projects just to MAYBE have
a lower-rated substitute of what Schwedt already has today… only that
at a MUCH higher price… plus the high cost of all the unnecessary 11
simultaneous projects…
a 6-month blitzkrieg ?
Or six years ? Six months is a ridiculous timespan for satisfactory
conclusion of all of the above. Quite frankly I´d be astonished if this
idea ever sees the light of day. Actually it´s nonsense whichever
schedule is adopted, but 6 months is beyond childish. By the way, 95%
completion is not enough. But German Economics Minister Robert Habeck
has said that six-months gives Berlin long enough to make the change. So
one of us two is wrong, and I say it´s him.
Actually, way before 6 months we should know about the schedule
non-compliance. The reason is Key Dates. Just like building a house, you
can´t place the window frames if the walls are not there. Same for
these projects there are key CPM – Critical Path guidelines and most
specially Key Dates by which xyz needs to already be timely in place as
planned, inspected, commissioned, permitted, etc. So if one Key Date is
not met, the schedule cannot make progress from there on or, worse yet,
may even blow up because the window for continuity of other stuff
sometimes is very narrow. Timing is of the essence and many things just
can´t be started unless xyz is finished first. Many of these are
parallel or partially parallel activities. But some are almost 100%
SEQUENTIAL which means that they have to be 100% satisfactorily
concluded before going on to the next one. Oh, an additional detail is
that if we care to believe Herr Habeck, all other refineries in the EU
would also be attempting to simultaneously pull the very same trick as
Schwedt. So 6 years sound far more reasonable than 6 months ? Ref #6 https://www.bbc.com/news/world-europe-61318689
Ref #7 https://www.cleanenergywire.org/news/germany-one-step-away-ending-dependence-russian-oil
the Rostock-Schwedt pipeline
The exotic idea consists in supplying the Schwedt Refinery from the
Rostock Baltic port which would ´supposedly´ be receiving viable oil
blends from yet-unknown vendors as explained before in great detail. But
that would NOT be enough quantity no matter how stretched. So the hope
and the prayer is that the same oil blends would also be unloaded at the
Gdansk Baltic port (Poland) now fully dedicated for Schwedt, not for
Polish refineries. Same for the Wilhemshaven Baltic port (Germany) with
only one single priority, namely Schwedt, not any OTHER of the many
German refineries all of which have not been assigned any sourcing yet,
if any were possible (!) . In turn, Rostock would also prioritize
Schwedt, not the Leuna Refinery (Germany) or the Plock Refinery
(Poland). It´d be a game of robbing Peter to pay Paul. Or a circus
number of Chinese plate spinners, which is impossible to work it out in
practice. Maybe it works sporadically, but such logistics will not fly
well most of the time meaning GAME OVER for Schwedt.
During the revamping & upgrading project of this pipeline,
operational and environment considerations should always have to comply
with the EU´s Green Deal spirit and wording, same as other EU Common
Policies in force. And always working with safe and ecofriendly
practices. Environmental impact assessments have to be completed,
presented, approved, permitted and commissioned. Also any strikes or
labor union problems would have to be avoided, with 24 x 7 activities no
week-ends, no Christmas. Plus an extraordinary HR challenge regarding
enough quantity and the right quality of management, staff, and all
sorts of field personnel from port maneuvering and logistics, to IT
contractors, to welders… in a fully unexpected 6-month pipeline &
refinery project, etc. The pipeline trace would go through highways and
urban areas with municipalities that have opinionated politicians… also
pristine environments, rolling hills, valleys and ridges, forests,
rivers, lakes, home to fish and wildlife with strong winds, rain and
snow. The switch-over from the Urals oil to the new “equivalent” blend
from yet unknown vendors is a most unfathomable and mysterious
procedure.
Ref #8 https://www.eek-energy.com/en/news/petroleum/detail/news/oil-industry-prepares-for-oil-embargo.html
the refinery blues
The comments section of my latest article gained greatly from the
input offered by SKovacs an excellent and friendly poster who shared his
first hand 30-year knowledge in the oil & gas and refining business
with us all. Please see link referenced below. Below I just summarize
and/or quote what this most experienced poster had to say
- matched & mated : many EU refineries have been built to
process certain types of oils found in Russia. The very design &
build of these refineries (and petrochemical plants) was based on
certain specific oil types within narrow variation in blend / quality
and steady supply — variation normally of less than 15% vol/day —
guaranteed for over 30 years (most commonly 50+ years). Obviously enough, the continuous supply of quality feeds is critical to the operation of a refinery or any chemical plant.
- obsessive compliance: adapting an EU refinery to new types of
oils requires detailed laboratory knowledge of the new blend, and formal
guarantees for its continuous delivery for decades, convoluted &
lengthy contracts and procurement processes, extremely detailed
engineering plans, manufacturing of parts, shipping, installation,
testing, commissioning, optimization, permitting etc. etc. etc. before
it can be declared “done”. Any element of this incomplete list, if
missing, renders the whole affair a failure both technically and
economically.
- guarantees: the above assumes guaranteed efficient and
continuous shipping and receiving network(s) are always in place and
fully operational (!) Such work involves thousands of people, complex processes and of course many billions of euros, regulatory permitting process, inherent lawsuits etc., i.e. A LOT OF TIME –
years ! Europe deprived of oil/gas/metallurgical coal from Russia — and
also iron ore — is unlikely to build much. Never mind the finer
components that require other alloy metals which are also provided by
Russia… Ref #9 https://thesaker.is/europes-mad-ban-on-russian-oil/
not your dog
Some may think that refinery feedstocks are like dog food, even
interchangeable. Not true. Refineries are very closely matched and
subtly calibrated/configured to very specific feedstocks difficult and
time-consuming to substitute. Changes can and have been made but it
requires lots of effort, money, dedicated facilities, experimentation,
mistakes, trial & error, specific expertise, risk, and most
importantly fixed, unchanging new feedstocks always
complying with specs. Substituting the quality and humongous quantity of
Russian oil feeds has never ever been attempted.
This means that Russia today supplies Europe with exclusive Urals
grades of very precise and constant homogenous physical & chemical
characterization that would be impossible to get from third parties fast
enough and cheap enough in continuous enormously large quantities from
different reservoirs wherever. So it´s a very delicate and tight
matching already achieved between Schwedt and the Russian Urals blend,
that most probably cannot be substituted
Ref #10 https://www.ifo.de/en/node/69417
the (very low) odds
Banning Russian oil means many things. Some are known to require —
among other things — time, money, expertise, human resources, etc.etc.
But some others are unknown and very complex. For example, finding many
new different oils – from many new unproven vendors – that collectively
and in a coordinated fashion ( ?? ) would constantly offer into the
future — rain or shine, come hell or highwater — the very same
homogenized profile of delivery, quality, quantity, price, service and
enlargeability of feedstocks that Russia has reliably provided Europe
for decades at low cost. Anything less and Europe will no longer be or
perform or deliver as we know it. Skeptics please easily find the 6
(six) criteria that such oil feedstocks mandatorily need to meet at Ref
#11 https://thesaker.is/why-russias-oil-ban-is-impossible/
Europe and Germany have been forewarned.
They better know what they are doing