German firm strikes black gold

As Berlin battles to reach climate neutrality by 2050, minnow Rhein Petroleum sees a niche for its unusually pure crude during the transition phase. (AFP)
Updated 24 November 2019

German firm strikes black gold

  • Rhein Petroleum’s success is an outlier amid a German oil sector in a long-term decline

RIEDSTADT, Germany: Outside the small town of Riedstadt, near Frankfurt, a bright green derrick pumping oil from deep underground marks a rare rural German site where that is still a profitable business.

As Berlin battles to reach climate neutrality by 2050, minnow Rhein Petroleum sees a niche for its unusually pure crude during the transition phase, although its output is dwarfed by the more than 2 million barrels a day still consumed by Europe’s top economy.

Manager Carsten Reinhold holds up a flask of the lukewarm, dark liquid the pumps have been heaving up from 1,500 meters (5,000 feet) below ground since last year.

Low in sulfur, such “light and sweet” crude oil resembles the so-called Brent reserves found in the North Sea. “It would be a shame to burn it all up” to fuel road traffic, Reinhold says, as this type of oil is especially suited to manufacturing industries, feeding into chemicals, pharmaceuticals, textiles and even blades for wind turbines.

A tanker truck passes by twice a week on average to siphon 33,000 liters (8,700 gallons) from the site’s metal storage tanks, some of it from the firm’s other drilling site in Bavaria. It brings the oil to a refinery 80 km away.

Rhein Petroleum was founded in 2007 by former Shell executives, and is today controlled by Netherlands-based Tulip Oil.

Where most German oil is pumped in the country’s north, especially out to sea, the company has bet on inland fields to the south.

The last well in the previous wave of extraction in western Hesse state closed in 1994, as oil prices below $20 per barrel and expensive techniques throttled profitability.

But with prices now above $60 — having previously peaked above $100 — margins look more promising.

Meanwhile, the oil company says the prospecting technology available for identifying hydrocarbon reserves deep below the earth has improved massively.

“Just like an ultrasound scan of a pregnant woman,” the latest technologies can create a 3D visualization of the world beneath our feet, Reinhold explains.

Meanwhile, drilling itself has become cheaper, as a single well can allow prospectors to explore a radius several hundred meters across, rather than having to drill again if they do not hit the right spot.

And where once wells were staffed around the clock, these days the high-tech facilities — built by Munich-based Siemens — can be controlled remotely with a smartphone app.

Even environmentalist activists are not a problem, as they are presently focused on Germany’s massive opencast brown coal mines. Rhein Petroleum says it is in contact with ecological movements, who approve of the company’s policy not to use the controversial hydraulic fracking technology that has powered the shale gas and oil boom.

Heidelberg-based Rhein Petroleum’s success is an outlier amid a German oil sector in a long-term decline however.

From a peak of around 8 million tons per year in the late 1960s, crude output fell to just over 2 million tons by 2018.

That was enough to cover around 2 percent of the requirements of Europe’s largest economy, still heavily industrialized.

“It’s important that we don’t give up oil extraction altogether, it helps reduce our dependence on imports, even if only a little,” says Ralf Schairer, who heads the Miro refinery. 

Energy expert Claudia Kemfert at economic think tank DIW disagreed, saying oil extraction in Germany “belongs to the past,” as “the energy transition and climate protection (measures) will marginalize hydrocarbons.”

Even now, she pointed out, major German carmakers like Volkswagen are making big bets on electric vehicles, while industries are looking for materials not based on oil.

But chemical behemoth BASF, while itself exploring such technologies, believes “natural gas and oil derivatives will remain an important raw material for the chemical industry over the medium term.”

Rhein Petroleum judges there is money to be made in the transition period, with its sights set on recently discovered oil reserves in neighboring Baden-Wuerttemberg state. Exploration is set to start late next year.

Dubai counts on pent-up demand for tourism return

Updated 11 July 2020

Dubai counts on pent-up demand for tourism return

DUBAI: After a painful four-month tourism shutdown that ended this week, Dubai is betting pent-up demand will see the industry quickly bounce back, billing itself as a safe destination with the resources to ward off coronavirus.

The emirate, which had more than 16.7 million visitors last year, opened its doors to tourists despite global travel restrictions and the onset of the scorching Gulf summer in the hopes the sector will reboot before high season begins in the last quarter of 2020.

Embarking from Emirates flights, where cabin crew work in gowns and face shields, the first visitors arrived on Tuesday to be greeted by temperature checks and nasal swabs, in a city better known for skyscrapers, luxury resorts and over-the-top attractions.

Tourism chief Helal Al-Marri said that people may still be reluctant to travel right now, but that data shows they are already looking at destinations and preparing to come out of their shells.

“When you look at the indicators, and who is trying to buy travel, 10 weeks ago, six weeks ago and today look extremely different,” he said in an interview.

“People were worried (but) people today are really searching heavily for their next holiday and that is a very positive sign and I see a very strong comeback.”

The crisis crushed Dubai’s goal to push arrivals to 20 million this year and forced flag carrier Emirates, the largest airline in the Middle East, to cut its sprawling network and lay off an undisclosed number of staff.

But Al-Marri, director-general of Dubai’s Department of Tourism and Commerce Marketing, said that unlike the gloom after the 2008 global financial crisis, the downturn is a one-off “shock event.”

“Once we do get to the other side, as we start to talk about next year and later on, we see very much a quick uptick. Because once things normalize, people will go back to travel again,” he said.

The reopening comes as the UAE battles stubbornly high coronavirus infection rates that have climbed to more than 53,500 with 328 deaths.

And as swathes of the world emerge from lockdown, for many travelers their holiday wish lists have shifted from free breakfasts and room upgrades to more pressing issues like hotel sanitation and hospital capacity.

With its advanced medical facilities and infrastructure, Dubai is betting it will be an attractive option for tourists.

“The first thing I’m thinking is — how is the health-care system, do they have it under control? Do I trust the government there?” Al-Marri said. “Yes they expect the airline to have precautionary measures, they expect it at the airport. But are they going to a city where everything from the taxi, to the restaurant, to the mall, to the beach has these measures in place?”

Tourists arriving in Dubai are required to present a negative test result taken within four days of the flight. If not, they can take the test on arrival, but must self-isolate until they receive the all-clear.

While social distancing and face masks are widely enforced, many restaurants and attractions have reopened with business as usual, even if wait staff wear protective gear and menus have been replaced with QR codes.

“When it comes to Dubai, I think it’s really great to see the fun returning to the city. As you’ve seen, everything’s opened up,” Al-Marri said.