Germany's Chemicals Industry Risks Shutdowns Amid Gas Shortage

Germany's vast chemicals industry has few options left to conserve natural gas amid uncertainty over Russian supply, with German companies risking shutdowns of production in case the supply situation worsens.

"There's not much more we can save, as efficiency has already been the driving force in the past few years," Wolfgang Grosse Entrup, CEO at the chemicals association Verband der Chemischen Industrie (VCI), told Reuters on Tuesday.

Germany's chemicals industry is the third largest industrial sector in Germany after the automotive manufacturing and machinery sectors.

Germany, Europe's biggest economy, and other EU member states are not ruling out the possibility that Russia may not resume gas flows via Nord Stream once the two-week maintenance period of the pipeline ends on July 21, or that Russia could cut supplies further.

Amid growing supply concerns, there have been calls for conserving gas, but the chemicals industry – which accounts for 15% of Germany's gas consumption and is the single biggest gas consumer in the country – says there isn't anything left to conserve. 

The possibility for saving gas is very limited, VCI's energy expert Jörg Rothermel told German radio WDR 5 Morgenecho in an interview at the end of last week. The option is basically to forgo production, Rothermel added. 

Germany depended on Russian gas supply for around 40 percent of its consumption before the war in Ukraine, and although it has reduced that dependence since the Russian invasion of Ukraine, it still fears shortages, rationing, an industrial collapse, and a recession in case Russian supply is further cut or completely halted.

Russian gas supply cuts could lead to widespread industrial collapse, German Federation of Trade Unions head Yasmin Fahimi said earlier this month.

"Entire industries are in danger of collapsing permanently because of the gas bottlenecks: aluminum, glass, the chemical industry," Fahimi said earlier this month.

By Charles Kennedy for Oilprice.com

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