BASF, a German chemicals company, may shut down due to gas shortages, The Guardian reports. The company’s production complex in Ludwigshafen has for many years been operating on cheap Russian energy. The shutdown of one of the world’s largest enterprises will have far-reaching consequences not only for the German economy, but also for the whole of Europe.
The industrial complex of the German chemicals giant BASF in Ludwigshafen in the southwest of Germany, covering an area of 10 square kilometers, is dependent on gas as both a raw material and as an energy source, consuming roughly as much as Switzerland does annually. The company has made every effort to provide itself with cheap Russian gas, but with the possible introduction of blue fuel rationing for industrial use by the government, it will be impossible to replace this energy resource, The Guardian wrote.
Since the 125 production plants in Ludwigshafen are an interconnected supply chain, a drop in gas supply could bring the entire industrial complex to a standstill. According to Daniela Rechenberger, a company spokeswoman, if the gas supply falls below 50 percent of the maximum requirement, production would have to be shut down completely.
“This has never happened before in the history of BASF, and nobody here would like to see it happen. But we will have no choice,” the Guardian reports.
Since the German natural gas storage facilities are 87 percent full, there is growing optimism that rationing can be avoided this winter. Even so, high gas prices could force companies such as BASF to halt production. Since much of the industrial complex has been in operation 24 hours a day since the 1960s, it is not clear whether production can be resumed after a shutdown, since a drop in pressure can lead to a breakdown of equipment. Such a course of action would have far-reaching consequences not only for Europe’s largest economy, but also for the entire continent, the publication notes.
The chemicals BASF produces are used for everything from toothpaste to vitamins, from building materials to nappies. BASF is one of the world’s largest producers of ibuprofen for painkillers, and its biggest consumer is the car industry. BASF is still producing AdBlue, a liquid to reduce air pollution from diesel engines, a shortage of which could bring trucks to a halt across Europe, The Guardian reports.
Under German law, households will not be subject to rationing, along with other “protected” consumers such as nursing homes or hospitals. The brunt of the cuts will fall on industry, which accounts for about a third of the country’s demand. The federal grid regulator has obliged large industrial consumers to report the required volumes to a centralised database, which is due to go live this autumn to assess where outages will have the most devastating consequences, says The Guardian.
The company has begun building renewable power plants in recent months, but keeping the Ludwigshafen supply chain without gas may prove insurmountable. An integral part of the industrial facility are steam crackers, in which giant gas furnaces break down crude oil derivatives into smaller components, rapidly heating them to 840°C. Equipment using electricity instead of gas to break down hydrocarbons was tested at the site in early September, but this technology will not be fully operational by the coming winter, The Guardian concludes.
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