BASF warns: If natural gas supply is reduced by 50%, its world’s largest chemical complex will be shut down

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BASF stated that reducing the natural gas supplied to its facility in Ludwigshafen, Germany, to less than half of the current demand would result in the complete shutdown of the world’s largest integrated chemical production complex. According to ChemWeek, BASF stated in an email on the 29th that there is no substitute for natural gas as a raw material or energy source in Germany; a shortage of natural gas would result in insufficient energy for chemical production as well as a lack of the key raw materials needed to manufacture products. On March 30, Germany announced an \"early warning\" regarding a possible emergency in natural gas supply due to \"payment disputes,\" stating that this measure was taken to address the risk of a sudden interruption in Russian natural gas supplies. Russia **demanded** that \"unfriendly\" countries pay for its natural gas in rubles starting from March 31, but the EU, which primarily pays in euros, rejected this proposal. Germany has urged consumers and companies to reduce natural gas consumption in order to cope with potential shortages. About half of the country’s natural gas and one-third of its oil come from Russia. If gas supply restrictions are imposed on industrial customers, Germany’s chemical industry may be forced to reduce production. “A continuous supply of natural gas is essential for chemical production. ”BASF stated that in Europe, 60% of the natural gas it purchases is used to generate the energy needed for production – steam and electricity ； The remaining 40% is used to produce basic chemicals, which supply a wide range of products for almost all industrial sectors. “The natural gas shortage will have a dual impact on chemical production. ”BASF said, “On the one hand, the production process will no longer have enough energy” ； On the other hand, natural gas will lose its role as an important raw material for product manufacturing. ” BASF believes that natural gas, as a raw material or energy source, cannot be replaced in (German) chemical production in the short term. If the supply of natural gas to BASF is significantly reduced, the company stated in a statement that it will have to cut back production of key basic chemicals and downstream products. The result will be that “all downstream customers will be affected.” In the processing industry, the production of many important daily goods will have to be reduced. ” In a statement, BASF cited synthetic ammonia as an example. BASF produces ammonia from natural gas; if the production of ammonia is restricted, the amount of fertilizer available for agriculture will decrease, which in turn will lead to a drop in food production. This will put additional pressure on an already very tense market. The effects of the disruption in Russian gas supplies will only become apparent after some time, but they should not be underestimated. BASF said, “The disruption to supply chains caused by the COVID-19 pandemic has shown just how fragile the global trade network is.” According to BASF’s official website, the Ludwigshafen site covers an area of about 10 square kilometers; it is the world’s largest integrated chemical production facility and also serves as BASF’s headquarters. According to ICIS, a spokesperson for Germany’s chemical trade association VCI said, “Without natural gas as a raw material and the necessary process heat, production plants will have to close.” ” “Additionally, due to the interconnected structural characteristics of large production bases, it will have serious consequences for downstream processors both within and outside the industry. ”VCI added that the chemical industry, including fine and specialty chemicals, fertilizers, consumer chemicals, and polymers, will face a shortage of raw materials—basic chemicals. Due to the enormous quantity of natural gas required and global supply bottlenecks, import substitution can only be achieved to a limited extent in Germany. According to VCI data, Germany’s chemical and pharmaceutical industries consume around 15% of the country’s natural resources, the highest proportion among all industrial sectors. Of this, 27% is used as raw material, while 73% is used for producing steam and electricity.