By Cristina Roca 
 

German chemicals company BASF SE paid an extra 800 million euros ($809.5 million) to keep its plants running during the second quarter compared with a year earlier amid soaring natural-gas prices, it said Wednesday.

The company has raised its prices and will continue to do so in order to offset this cost, BASF Chief Executive Martin Brudermueller said during an earnings call.

The company on Wednesday raised its full-year guidance on the back of strong first-half results, but warned that it expected the economy to cool amid the war in Ukraine and its impact on energy and raw-material prices, which could pose additional headwinds over the second half of the year.

BASF said all its European plants' demand for natural gas is being met at the moment. Should the German government declare the highest stage of emergency--part of a plan to cope with Russia's curbing of gas flows to Europe--, BASF expects it would still get enough gas to run its largest plant in the country, Ludwigshafen, at a reduced load.

"We are also confident with regard to Schwarzheide, our second largest site in Germany. Here, for example, we are able to generate 100 percent of our power and steam demand using fuel oil," Mr. Brudermueller said.

The executive outlined the steps being taken by the company to cut its reliance on natural gas in the event of a shortage.

BASF said it is preparing to swap gas for other energy sources, such as fuel oil, wherever possible. It has also lowered production at plants that consume large quantities of gas, such as ammonia plants, it said, adding that this is a standard industry practice when margins aren't economically viable.

The company added that it was possible to source gas-intensive ammonia externally for Ludwigshafen. Power and steam production at the plant can also partially be switched to fuel oil, which would substitute around 15% of the natural gas needed for this, it said.

 

Write to Cristina Roca at cristina.roca@wsj.com

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(END) Dow Jones Newswires

July 27, 2022 04:26 ET (08:26 GMT)

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