BASF says chemical plants will operate through gas crisis

German chemical giant BASF, the largest gas consumer in Germany, said Wednesday its factories would continue production on a reduced scale even if supplies of the fuel are rationed.

If the government imposes its rationing plan over the winter, “we assume BASF will still get enough gas to keep our Ludwigshafen plant in operation at reduced capacity,” CEO Martin Brudermueller said in a conference call.

The site in western Germany is the world’s largest chemical production plant, employing some 39,000 people and seen as particularly exposed to the consequences of a gas shortage.

The plant is supplied primarily with Russian gas, deliveries of which have dwindled amid tensions with Moscow over its invasion of Ukraine.

Ludwigshafen would not be able to keep operating if its supplies were cut by over 50 percent, Brudermueller said.

“Most of the gas industry is really system-critical,” he said, adding that the group was in discussions with the government about maintaining the gas supply to the sector.

In parallel, BASF was finding ways to “substitute” for gas and “optimise its production units” to save on the fuel, Brudermueller said.

At its second largest location in Germany, in Schwarzheide, BASF could produce all the electricity and steam it needed with fuel oil, Brudermueller said.

The same switch would only be “partially” possible at the main site in Ludwigshafen, he noted.

BASF was also “reducing production at units that require big volumes of gas, such as ammonia production units,” the CEO said.

Ammonia is used in particular in the production of fertilisers. BASF was sourcing alternative quantities from suppliers, which could lead to increasing costs, Brudermueller warned.

BASF on Wednesday raised its full year outlook for revenues and operating profit on the back of “very positive” second quarter results “despite the continued high raw materials and energy prices”.

The chemical group now sees sales for the year coming in between 86 billion euros ($87.1 billion) and 89 billion euros, up from their previous estimate of between 74 and 77 billion euros.

smk-sea/mfp/lcm