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1 Apr, 2022 07:43

German chemicals giant in trouble

BASF will shut down if Russian gas deliveries are interrupted
German chemicals giant in trouble

German multinational chemicals giant BASF has warned of the drastic consequences if gas supply from Russia is interrupted, German newspaper Frankfurter Allgemeine reported on Wednesday.

If gas supplies were to be cut in half, the Ludwigshafen plant – the largest chemical site in the world, which employs almost 40,000 people, would have to shut down, the paper quoted Michael Vassiliadis, chairman of a chemical trade union and a board member at BASF, as saying.

If the gas supply was less than 50%, the site could no longer be operated stably and it would have to be shut down completely, Vassiliadis explained. If loss of the Russian gas was not compensated for, the effects on the chemical industry would be dramatic with the outage costing “hundreds of thousands of jobs over a relatively short period of time" and affect supply, he said.

BASF CEO Martin Brudermüller said earlier that there was no way to replace Russian gas in the short term but the group was working intensively on reducing its dependency on gas.

The report in the Frankfurter Allgemeine points out that the chemicals industry cannot run without oil and gas, and without the sector the economy stops, as people are heavily reliant on it in their everyday lives.

Petrochemical products account for 20% of clothing, 40% of cosmetic products and even 35% of aspirin, an essential in most families’ medicine cabinet.

The EU gets roughly 40% of its natural gas from Russia. Following Russia’s military operation in Ukraine the bloc pledged to reduce its dependency on Russian energy, cutting it by two thirds this year and weaning off completely before 2030, replacing it by deliveries from other suppliers and renewables.

The German government recently clinched a gas deal with Qatar. However, Qatar, which is one of the three largest exporters of liquified natural gas (LNG) in the world, pointed out last week that no supplier was able to fully substitute Russian gas in Europe at short notice.

Moscow and the EU are currently at loggerheads regarding payment for future gas deliveries, as Brussels rejected Moscow’s demand of payments in rubles. The Kremlin says currencies like the dollar and the euro have been compromised by the sanctions and Russia will not deliver gas for free.

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