It Could Be a Bun Fight for Gas If The EU Rations Supplies

The EU is currently planning how it will prioritise gas in the event supplies have to be rationed to industry. Don’t expect chemical companies to form an orderly queue.

Whether it’s additives for tires or food, every company in the industry considers its products as critical essentials and will fight tooth and nail for their share, bending the ear of anyone with influence. Collectively, the chemical industry will be battling against cement and other heavy energy users.

Analysts expect fertiliser makers and other businesses of big strategic importance like industrial-gas suppliers to be prioritised. Beyond those groups, it’s a bit of a question mark.

Kemira Oyj, a Finnish supplier of water-treatment chemicals, fancies its chances. If a utility wants to deliver drinking water and treat sewage, it will need the aluminum coagulants and other additives that Kemira makes at its site in Dormagen, Germany, where the government has advanced to stage two of its three-stage gas emergency plan.

Kemira CEO Jari Rosendal believes he has an additional bargaining chip to help secure gas supplies. The company is involved in energy generation at its plants, including producing biogas from fermented sludge, something that is bound to go in Kemira’s favour, he added.

Because there’s no one scenario to prepare for yet, multiple contingency plans are being drawn up at Norwegian fertilizer maker, Yara International ASA. It’s looking at possible outcomes at the plant, national, and European level and CEO Svein Tore Holsether is making sure there’s a “good level” of dialogue to make sure his company’s case is heard.

The impact could ripple out in indirect ways too. AkzoNobel, Europe’s largest paint and coatings company, powers its plants with renewable energy but CEO Thierry Vanlancker is bracing for any impact on suppliers of key raw materials like polyurethane and resins.

Europe hasn’t reached breaking point in natural gas yet. There is the odd production curtailment at customers and suppliers in Southern Europe but it’s patchy. Short shutdowns designed to avoid gas spikes, Rosendal said.

”It’s difficult to assess the scenarios. If push comes to shove we can change and source raw materials from around the world instead of locally,” Vanlancker said on a call. Stockpiling isn’t really an option as the outcomes are impossible to predict and besides AkzoNobel has had two years to practise coping with the unknown during Covid, he added. ”We’re focusing on the things we can control.”

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