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.


Mexico objects to labor enforcement provision in North American trade deal

Updated 26 min 10 sec ago

Mexico objects to labor enforcement provision in North American trade deal

  • Mexico produced more stringent rules on labor rights aimed at reducing Mexico’s low-wage advantage
  • US House of Representatives proposes the designation of up to five US experts who would monitor compliance with local labor reform in Mexico

MEXICO CITY: Mexico’s deputy foreign minister, Jesus Seade, said on Saturday he sent a letter to the top US trade official expressing surprise and concern over a labor enforcement provision proposed by a US congressional committee in the new North American trade deal.
Top officials from Canada, Mexico and the United States on Tuesday signed a fresh overhaul of a quarter-century-old deal, aiming to improve enforcement of worker rights and hold down prices for biologic drugs by eliminating a patent provision.
How labor disputes are handled in the new United States-Mexico-Canada Agreement (USMCA) trade deal was one of the last sticking points in the negotiations between the three countries to overhaul the agreement.
Intense negotiations over the past week among US Democrats, the administration of Republican US President Donald Trump, and Mexico produced more stringent rules on labor rights aimed at reducing Mexico’s low-wage advantage.
However, an annex for the implementation of the treaty that was presented on Friday in the US House of Representatives proposes the designation of up to five US experts who would monitor compliance with local labor reform in Mexico.
“This provision, the result of political decisions by Congress and the Administration in the United States, was not, for obvious reasons, consulted with Mexico,” Seade wrote in the letter. “And, of course, we disagree.”
USMCA was signed more than a year ago to replace the North American Free Trade Agreement (NAFTA), but Democrats controlling the US House of Representatives insisted on major changes to labor and environmental enforcement before voting.
The letter, released on Saturday, is dated Friday and addressed to US Trade Representative Robert Lighthizer. Seade said he would travel to Washington on Sunday to raise the issues directly with Lighthizer and lawmakers.
“Unlike the rest of the provisions that are clearly within the internal scope of the United States, the provision referred to does have effects with respect to our country and therefore, should have been consulted,” Seade wrote.
Both Canada and the US House Ways and Means Committee said the deal included a mechanism for verification of compliance with union rights at the factory level in Mexico by independent labor experts.
Some Mexican business groups bemoaned a lack of clarity and conflicting information on how the rules would actually be enforced under the deal, the first text of which became public only on Wednesday.