Eeverything is connected at the Ludwigshafen site of the German chemical company BASF, a 10 km² industrial complex so large that the company operates its own bus network to take employees from its doors to their place of work.
By-products from the manufacture of ammonia, for example, are transported through a 1,771-mile (2,850 km) network of pipes from one end of the site to the other, where they are recycled to produce fertilizers. , disinfectants, diesel exhaust fluid or carbon dioxide for soft drinks. .
the said verbose The (composite) principle was the key to BASF’s rise in 157 years from “Baden Aniline and Soda Factory” to the largest chemical manufacturer in the world. Today, when Vladimir Putin has severely restricted energy exports to Europe, this ingenious interconnectivity could be his downfall.
The site in southwestern Germany depends on gas as a raw material and as a source of energy, consuming roughly as much each year as the whole of Switzerland, and BASF has played an active role in ensuring that much of this gas is imported cheaply from Russia.
If the German state were forced to ration gas for industrial use this winter, BASF says it can reduce its consumption to some extent, by limiting individual factories or replacing gas with fuel oil at certain stages of production. . It has already reduced its ammonia production locally, instead of shipping the chemical from overseas.
However, since Ludwigshafen’s 125 production plants constitute an interconnected value chain, there is a point where a drop in gas supply would lead to a site-wide shutdown.
“Once we can meaningfully and permanently receive less than 50% of our maximum requirement, we will have to shut down the entire site,” said Daniela Recchenberger, a company spokeswoman. “This is something that has never happened in BASF’s history, and something that no one here would want to see happen. But we would have little choice.
With German gas storage 87% full, there is growing optimism that rationing can be avoided this winter. But even then, high gas prices could force companies such as BASF to halt production. With large parts of verbose A site that has operated around the clock since the 1960s, BASF says it is unclear whether production could simply be restarted afterwards or whether the drop in pressure would cause some machines to break down.
The consequences of a shutdown in Ludwigshafen would be far-reaching, not just in Europe’s biggest economy, but across the continent. Buyers still associate BASF’s initials with audio and video cassettes, but it sold off that business arm in the mid-1990s and today its sales are mostly business-to-business; its products more invisible but also more essential.
Chemicals produced by BASF are used to make everything from toothpaste to vitamins, building insulation to diapers. It is one of the world’s largest manufacturers of ibuprofen for painkillers and the automotive industry accounts for 80% of its sales, which means that the spraying of pipelines in Ludwigshafen would have a direct impact on automotive manufacturing regions such as Emilia-Romagna, Catalonia or Hauts-de-France.
One of the few end products still produced in Ludwigshafen is AdBlue, a liquid used to reduce air pollution from diesel engines. This is a legal requirement for HGVs, so a shortage could cause trucks across Europe to stop.
Under German law, households would be excluded from gas rationing along with other “protected” customers such as nursing homes or hospitals. The weight of the reductions is expected to be carried out by industry, responsible for about a third of the country’s demand.
The federal grid regulator has forced large industrial consumers to submit their needs to a centralized database set to go live this fall to assess where shutdowns would have the most devastating ripple effects. The chemical industry should be in the front line for exemptions.
The question is how fair is it for the government to help BASF out of a dilemma in which it played a part and continues to profit?
The chemicals company’s ties to Russia’s state energy company Gazprom date back to just after German reunification in 1990, when it tried to use newly opened gas routes from the east to break the monopoly of Germany’s own trader, Ruhrgas. . Through its subsidiary Wintershall, it co-financed the construction of Nord Stream 1, the gas pipeline with which the Kremlin tried this year to ransom the European Union, and Nord Stream 2, which was stopped just before the invasion of the EU. Ukraine in February.
The collaboration flourished despite mounting evidence of Moscow’s aggression: in 2015, a year after Russia’s annexation of Crimea, Wintershall handed over Western Europe’s largest gas storage tank in Rehden to Gazprom in exchange for shares in gas fields in Western Siberia.
The swap was “politically desired and politically backed” at the time, says BASF, and strategic gas reserves were not considered a priority by then-Chancellor Angela Merkel.
But the role BASF has played in the current energy crisis may not be so easily overlooked in the long run. Its chief executive, Martin Brudermüller, who in April strongly opposed a Russian gas embargo, came across as “an arsonist who sets the house on fire first and then claims that he alone is capable of turn off,” wrote the editor of the Taz newspaper in a recent comment.
The chemical company’s lucrative link with Gazprom continues to this day despite Russia’s war in Ukraine, which prompted the EU to impose sanctions on several figures linked to Gazprom, but not the company itself . BASF ended its business operations in Russia and Belarus in July, but implemented exceptions to support food production and retains its stake in Wintershall, now known as Wintershall Dea.
The chemical company made strong profits in the first half of the year, mainly due to the fact that this subsidiary benefited from high oil and gas prices.
BASF owns two-thirds of Wintershall Dea, with the rest held by Russian-Israeli oligarch Mikhail Fridman, who faces European and British sanctions. The energy company’s adjusted net profit in the first half of this year was €1.3bn (£1.1bn), as its pre-tax profit in Russia increased fivefold from the same period in 2021.
BASF says these profits come from gas produced by Gazprom sold on the Russian market, rather than to the EU.
The company has tried to make up for lost time in recent months, starting to build a solar farm in Brandenburg and a large wind farm off the Dutch coast to ensure that renewables meet more of its energy needs. But keeping Ludwigshafen’s value chain intact without gas can be an insurmountable challenge.
The essential centerpiece of the site are its two steam crackers, in which giant gas furnaces “break” crude oil derivatives into smaller components by rapidly heating them to 84°C.
A test site using electricity rather than gas to crack hydrocarbons was unveiled in early September at BASF’s premises on the Rhine but will not be fixed for next winter. “It’s not something you can do in two months,” says Nonnast. “It might be possible in five years, but only because we started thinking about it five years ago.”