BASF May Close The World's Largest Chemical Base!

BASF said that reducing the supply of natural gas to its Ludwigshafen site in Germany to less than half of current demand would result in the complete cessation of operations at the world's largest integrated chemical production site.

According to chemweek, BASF said in an emailed statement on the 29th that there is no substitute for natural gas as a raw material or energy source (in Germany), and a shortage of natural gas will result in it not having enough energy for chemical production and lack of key raw materials for manufacturing products. 

On March 30, Germany announced an "early warning" of a possible gas supply emergency over a "payment dispute", saying the move was aimed at dealing with the risk that Russia's gas supply could be interrupted at any time.

The Russian government asked the "unfriendly country" to pay its gas bills in rubles from March 31, but the European Union, which pays mainly in euros, rejected the proposal.

Germany has urged consumers and companies to reduce gas consumption in response to possible shortages. About half of the country's natural gas and one-third of its oil come from Russia.

Germany's chemical industry could be forced to cut production if gas supply restrictions are imposed on industrial customers.

"Continuous supply of natural gas is essential for chemical production." BASF said that in Europe, 60% of the natural gas it buys is used to produce the energy it needs - steam and electricity; the remaining 40% is used to produce basic chemicals, which Chemicals provide a wide range of products for almost all industrial sectors.

"The shortage of natural gas will have a dual impact on chemical production," BASF said. "On the one hand, there will no longer be enough energy for the production process; on the other hand, natural gas will lose its (role) as an important raw material for the manufacture of products."

BASF believes that natural gas cannot be replaced in (Germany) chemical production in the short term as a raw material or energy source.

If the supply of natural gas to BASF is to be significantly reduced, BASF said in a statement it would have to cut production of key basic chemicals and downstream products. The result will be "all downstream customers will be affected. In the processing industry, the production of many important everyday items will have to be reduced."

In its statement, BASF cited synthetic ammonia as an example. BASF produces ammonia from natural gas, and if ammonia production is limited, there will be less fertilizer available to agriculture, which in turn will lead to lower food production. This will put additional pressure on an already tight market.

The impact of Russian gas supply disruptions, which will only become apparent after a period of time, should not be underestimated. "The disruption to supply chains caused by the coronavirus pandemic has shown how fragile the global trade network is," BASF said.

According to BASF's official website, the Ludwigshafen base covers an area of about 10 square kilometers. It is the world's largest integrated chemical production base and is also the headquarters of BASF.

According to ICIS, a spokesman for the German chemical trade association VCI said: "If there is no natural gas as a feedstock and the necessary process heat is generated, the production plant will have to close."

“Additionally, due to the interconnected structure of large production bases, there will be serious consequences for downstream processors inside and outside the industry.” VCI added that chemical industries such as fine and specialty chemicals, fertilizers, consumer chemicals and polymers will lack raw materials— - Basic chemicals.

Import substitution in Germany can only be achieved to a limited extent due to the large quantities required for natural gas and global supply bottlenecks.

According to the VCI, Germany's chemical and pharmaceutical industries consume about 15% of the country's natural resources, the highest of any industrial sector. Of this, 27% is used as raw material and 73% is used to produce steam and electricity.