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

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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.

  1. Wilhelmshaven + Gdansk : dedicated storage + equipment for frequent inbound seaborne batch deliveries
  2. Wilhelmshaven + Gdansk : dedicated logistics for outbound deliveries to Rostock port storage terminals
  3. Rostock : berth revamping for larger seaborne inbound oil tankers from Wilhelmshaven or elsewhere
  4. Rostock : dedicated storage facilities + handling equipment for larger, more frequent seaborne batches
  5. Logistics for internal delivery via inland waterways + rail + road inbound to both W. + R. storage terminals
  6. Rostock port – Schwedt Refinery: pipeline upgrade & revamping + modifications to receive Rostock feed
  7. Schwedt Refinery: new oil feedstock definition, testing and vendor selection, approval, certification & contract.
  8. Schwedt Refinery: retrofit and revamping modifications per Option (3) described above.
  9. 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

  1. 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.
  2. 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.
  3. 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/

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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.

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