Lunch with the BASF boss

In particular, the boss of the chemical giant revealed how when it comes to making investment decisions, companies like his that have global reach will shut down process plants in parts of the world deemed uncompetitive, and build new ones where they can get more bang for their buck.

My meeting with Bock in a London hotel came a month after BASF announced it was closing its pigment plant in Paisley, Scotland, as well as scaling down a number of other European plants within its Performance Products division. At the same time the firm announced it was investing €250 million in other areas, including the expansion of pigment plants in China and Korea.

But this is not simply a shifting of businesses to the east: the cost of energy in Europe, and to a lesser extent in Asia, said Bock, meant that when BASF came to consider where to build a world-scale ammonia plant, the US with its natural gas boom and low energy costs was a natural choice.

BASF announced a letter of intent to build the plant in joint venture with Norwegian chemical firm Yara.

“We could have built that plant anywhere,” said Bock.

“But at the moment the US Gulf coast is the best location.”

Bock has very clear views about what he believes is driving up energy prices and making Europe uncompetitive for new investments: renewable electricity.

In a recent interview with the German news magazine Der Spiegel Bock attacked the German system of supporting renewables, which he believes means chemical companies have to pay over the odds for the energy they use.

Again over our lunch he described renewables as a “drag on competitiveness” and made clear where he believed Europe, and especially the UK, should focus its efforts when it comes to energy supplies: shale gas.

BASF’s oil and gas subsidiary Wintershall, said Bock, has used techniques similar to hydraulic fracturing to extract tight gas for decades, and the only reason he believes a fracking revolution isn’t sweeping Europe is due to “myths” surrounding fracking.

In particular, he said the chemicals used in fracking are minimal and commonly found in many households, such as detergents and biocides.

“I don’t want to simplify the issue too far,” said Bock, “but in terms of the water that goes down into the ground, it’s the same type of chemical composition as the water from your dishwasher that goes down the drain.”

Speaking of water, Bock also confirmed that despite the Paisley closure and his concerns over energy costs, his company hasn’t totally given up on investing in the UK: the firm is currently investing £70 million in the upgrade of its Bradford and Grimsby sites, which produce chemical products for the water industry.

The investment, which will be completed by 2015, will move the plants to modern automated processes…though the resulting automation will cost another 170 BASF UK jobs, on top of the 141 lost with Paisley’s closure.

A full interview with BASF chairman Kurt Bock will appear in the January issue of Process Engineering.