Energy prices: production in Europe is too expensive for chemical company BASF

The German chemical giant BASF does not rule out relocating certain "particularly energy-intensive" productions.

Partagez:

The German chemical giant BASF does not rule out relocating certain “particularly energy-intensive” productions, considering it difficult for the European chemical industry to be competitive in the context of soaring gas prices, its CEO said on Thursday.

“The question arises as to whether commodities, in particular, can still be produced competitively in Europe and Germany in the long term,” explained Martin Brudermüller in an interview with the business daily Handelsblatt.

While BASF has already announced this fall a savings plan of 1 billion euros for 2023 and 2024, this will not be enough and “adjustments are also needed in production,” he added.

“We will announce our plans in the first quarter,” he continued, noting that the focus was on “particularly energy-intensive products” such as ammonia, for which energy accounts for about 80% of manufacturing costs.

As Germany’s largest consumer of gas with 47 terawatt hours consumed annually, BASF saw its bill triple in Europe in the first nine months of the year compared with 2021. It is even nine times higher than in 2020, according to Brudermüller.

BASF has been able to reduce its consumption at the margin by improving energy efficiency, and by replacing gas with oil-based energy sources. “But unfortunately, most of the savings come from production shutdowns.

While gas prices, which are currently falling, will stabilize, “we believe that in the long term they will be about three times higher in Europe than in the U.S., if only because of the higher costs of LNG” (liquefied natural gas) which replaces imports from Russia.

Martin Brudermüller had already caused a stir at the end of October by announcing that the group was going to “permanently” reduce the size of its operations in Europe, while the group wants to strengthen its position in China, where it is making significant investments.

“In the third quarter, the European chemicals market fell by 6%,” adds the CEO, who sees this as the acceleration of a loss of competitiveness that has been underway for a decade.

He also questions “the excessive regulation” of the European Union’s Green Pact, the roadmap for EU countries to achieve climate neutrality by 2050.

BASF produces a wide range of chemicals for the automotive, agricultural, construction, plastics, paint and dye industries. The huge complex in Ludwigshafen alone, its historic location in western Germany, employs around 39,000 people.

Invenergy seals four further contracts with Meta to supply nearly eight hundred megawatts of solar and wind power to the group’s data centres, lifting total cooperation between the two companies to one point eight gigawatts.
Pedro Azagra leaves his role as CEO of Avangrid to become CEO of Iberdrola, while Jose Antonio Miranda and Kimberly Harriman succeed him as CEO and Deputy CEO respectively of the American subsidiary.
The US investment fund Ares Management enters Plenitude's capital by acquiring a 20% stake from Eni, valuing the Italian company at 10 billion euros and reinforcing its integrated energy strategy.
ENGIE secures a contract to reduce Airbus' industrial emissions in France, Germany, and Spain, targeting an 85% decrease by 2030 through various local energy infrastructures.
Alain Rhéaume, Chairman of Boralex’s Board of Directors for eight years, will leave his position by December, following the appointment of his successor by the governance committee of the Canadian energy group.
Norwegian group Statkraft plans an annual cost reduction of NOK2.9bn ($292 million) by 2027, citing possible job cuts amid rising financial burdens and volatility in the European energy market.
EDF merges EDF Renouvelables and its International Division into EDF power solutions, led by Béatrice Buffon, to optimise its global 31 GW low-carbon energy portfolio and strengthen its international positioning.
TotalEnergies announces a strategic partnership with Mistral AI to establish a dedicated innovation laboratory integrating artificial intelligence tools aimed at enhancing industrial efficiency, research, and customer relations.
The Energy Transitions Commission warns of economic risks tied to growing protectionism around clean technologies, while calling for global consensus on carbon pricing.
Baker Hughes has reached an agreement to sell its precision sensor product line to Crane Company for $1.15bn, thereby refocusing its operations on core competencies in industrial and energy technologies.
American conglomerate American Electric Power sold 19.9% of two transmission subsidiaries to KKR and PSP Investments, raising $2.82bn to support its five-year $54bn investment plan.
The new mapping by Startup Nation Central identifies 165 active companies in Israel’s energy technologies, amid strong private funding and growing global market interest.
The new CEO of EDF, Bernard Fontana, aims to achieve €1 billion in operational cost savings for the French energy giant by 2030, prioritizing industrial contracts and the national nuclear sector.
CMS Energy Corporation has announced a cash tender offer for debt securities totalling $125 million, issued by Consumers Energy. The offer expires on July 3, 2025, with priority given to bonds submitted before June 17, 2025.
Vermilion Energy is exiting the U.S. market permanently by selling its assets for C$120mn ($87.88mn), refocusing its operations on Canada and Europe while reducing its debt and investment budget.
In 2024, Italian energy giant Eni paid approximately €8.4 billion to various global governments. These payments, primarily concentrated in Africa and Asia, reflect its commitments in the international energy sector.
The International Energy Agency projects a record-high global energy investment in 2025, driven by electricity and low-carbon technologies despite geopolitical and economic uncertainty.
The Czech regulatory authority launches an investigation into suspected collusion involving several major actors in the awarding of a thermal power plant, putting transparency of a strategic transaction for the energy sector at stake.
The Democratic Republic of Congo is set to replace its temporary ban on cobalt hydroxide exports with quotas, aiming to balance global demand, secure revenue, and stabilize market fluctuations.
European Energy secured EUR 145mn in financing from SEB and Swedbank to support wind, solar, and storage assets in Lithuania, reinforcing its regional expansion strategy.