BASF plans to invest 67 billion yuan to establish a production facility in China

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BASF plans to invest 67 billion yuan to establish a production facility in China. Author/Source: Energy & Chemical News. Date: July 4, 2022. Clicks: 13. With the end of the G7 summit, relations between Russia and Europe and the United States have become more tense. As the United States took the lead in imposing various sanctions on Russia, the EU also grew concerned about the possibility of Russia cutting off natural gas supplies. Currently, Russia’s gas supply to Europe is gradually decreasing, and a haze of an \"energy crisis\" is enveloping every EU member state. According to U.S. media reports, due to the current shortage of natural gas, BASF, the world’s largest chemical company, may be forced to shut down. Chemical giant BASF may be forced to shut down its chemical production facility in Ludwigshafen, Germany, which is one of the largest chemical plants in the world. This chemical giant owns 200 chemical plants; it is the largest chemical complex in the world and serves as the starting point for Europe’s chemical supply chain. If the shutdown affects not only 40,000 employees, it could also lead to supply disruptions in Europe, high inflation, and pose a threat to the European economy. Currently, BASF is “complaining” externally: if the natural gas supply continues to decline, how can this integrated facility be shut down? For them, stopping production would be a difficult task, as they have never encountered such a situation before. If I had known this, why was Germany so arrogant before? ➤ How did Germany gradually turn itself into a country facing a gas shortage? As early as 2014, many European countries called for \"diversifying energy supplies.\" In fact, all EU member states have thought at some point that they might end up in conflict with Russia. But one’s own destiny cannot be controlled by Russian energy. The thunder was loud, but the rain was light ； The EU talks tough, but its dependence on Russian energy continues to increase day by day. Germany is the most developed country in the EU, both economically and in terms of its manufacturing sector; it can truly be regarded as a leader within the EU. It is also the loudest advocate when it comes to imposing sanctions on Russia. Earlier on, environmentalism became popular in Germany. As a result, Germany shut down its nuclear power plants and phased out coal ； What they love the most is clean energy – natural gas. Germany, as a leader in this effort, suspended the approval process for the Nord Stream 2 gas pipeline in order to take the lead in imposing sanctions on Russia; this effectively doomed this crucial project for securing natural gas supplies. However, things took an unexpected turn: the equipment on Nord Stream 1 broke down, and German company Siemens refused to send replacement equipment. According to media reports, this incident reduced the proportion of Russian gas imported by Germany from 50% to 30%. While being selfish, Siemens also needs to think carefully about its own subsidiaries that require gas. Currently, Germany has gone back on its promises and started burning coal for electricity generation. Meanwhile, the EU has begun formulating a directive calling for storing 80% of natural gas reserves by November, while also urging citizens to conserve gas usage. The louder the calls for sanctions against Russia, the more severe the reduction in natural gas supply becomes, and the terror of a gas shortage is spreading across the European continent. ➤ The path to self-reliance for the world’s largest plant lies in China. BASF, the world’s largest chemical complex, once reaped tremendous benefits from cheap and high-quality Russian gas. According to the data, 60% of the natural gas consumed by BASF is used for power generation and steam production, while 40% is used as a raw material for products. Precisely because natural gas is needed everywhere, these companies are highly vulnerable to gas shortages. When the natural gas level drops to a certain point, the entire chemical plant will have to shut down. Currently, BASF is turning to China for help! According to foreign media, BASF is planning to “transfer its operations” by investing $10 billion (approximately 67 billion yuan) in Zhanjiang, China, to build a production base. Because China’s chemicals market is the largest in the world and the fastest-growing. This will be BASF’s largest investment project! According to China Daily Online, the BASF Zhanjiang integrated facility project was announced in July 2018 and officially launched in November 2019. Upon completion, it will become BASF’s largest investment project to date and its third-largest integrated production site globally, second only to the sites in Ludwigshafen, Germany, and Antwerp, Belgium. The entire integrated facility is scheduled to be completed by 2030, with the first production unit coming online in 2022. But transitioning to the Chinese market also takes time. Citing data from the U.S.-based financial analytics firm FactSet, the Wall Street Journal reported that Europe remains BASF’s main source of revenue at present, accounting for roughly 40% of its total income, while revenue from China makes up about 14% of the company’s total. BASF stated that it hopes to enter markets where it can achieve a “healthy balance!” ”