Germany in slippery slope in petrochemicals

Undoubtedly, petrochemicals are vital compounds used in manufacturing of wide ranging materials used in everyday life. You know about the plastic revolution that has replaced paper almost in its entirety.

Germany’s petrochemical industry is massive, covering billions of Euro.  The downside is Germany is slipping in this sector. Let me explain basis facts, analysis, synthesis and my counsel on this geoeconomics threat facing Germany today:

Facts

1. Petrochemicals are derived primarily from crude oil and natural gas during refining and processing. This base material is then used to turn out plastics, synthetics, detergents, pharma, aromatics, solvents, pesticides, and most importantly fertilizers of various hues

2. Germany has Europe's largest, petrochemical industry grossing over €170 Billion in turnover. Heavily concentrated in Rhine- Ruhr and concentrated heavily in hubs like Rhine-Ruhr. Notable firms include BASF, Rosneft Deutschland, PCK Refineries, and BP.

Analysis

1. Approximately chemical & pharma sector accounts for one third of the industrial output of Germany and is steadily growing

2. Germany depends on countries like Netherlands to route through the imports of processed petrochemicals being the world's 3rd largest petrochemical importer

3. Iran is one of the Middle East's largest petrochemical producers, having an installed capacity of around USD 100 million tons per year. Other than Iran Saudi Arabia supplies almost 7% of worldwide supply out of the Gulf Cooperation Council’s share of 13% of the world’s petrochemical output.

Synthesis

1. Outside importation of processed petrochemical, Germany has her own processing industry which once again is dependent upon imported crude oil to produce foundational commodities like ethylene & methanol within her shore.

2. Global supply chain issues could disrupt the importation of both processed petrochemicals as well as crude oil & gas. The closure of Hormuz Strait exacerbates this issue.

My Counsel

Therefore, Germany must quietly make friendly overtures to Iran following the examples set by Spain & Italy and even by France to some extent.

Time to amend German foreign policy so that navigating strategy amid geoeconomics is carried out without further delay!

 

Cheers!

 

Muthu Ashraff

Strategy Adviser

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Strategy Adviser