Germany energy crisis powers hydrogen switch

From the moment Russian gas exports to Germany were first disrupted in June, German firm Kelheim Fibers began casting around for alternative options to keep its engines running, said Reuters.

As a result, the Bavarian-based firm, whose fibers are used in anything from teabags to tampons, will be able to use heating oil instead of gas starting mid-January. The downside is that will increase carbon emissions and for the longer term, the firm is considering a switch to hydrogen, which is a much cleaner energy source provided it is produced using renewable power.

"We want to be one of the first large companies in Bavaria to switch to hydrogen," Craig Barker, managing director of the 87-year-old firm, told Reuters. Energy costs account for over 60%-70% of the company's variable expenses, overtaking that of its main raw material, Barker said.

Kelheim Fibers is one of many small and medium-sized companies that form the backbone of Europe's biggest economy, and that are seeking to diversify their energy mix to maintain output. Russia's reduction of gas supplies to Germany following Moscow's invasion of Ukraine in February, has forced Berlin to reactivate or extend the lifespan of its coal-fired power plants, putting greenhouse emissions targets in jeopardy.

However, ifo economist Klaus Wohlrabe said the crisis could eventually lead to greener production. "Relying on fossil fuels for the long term has proven to be a risky path. So in the medium term, at least, companies have no choice but to reorientate themselves," Wohlrabe said.

Kelheim Fibers, which has so far covered 85% of energy needs with gas, is in talks with stakeholders over hydrogen imports with an expected annual consumption of about 30,000 tons, starting from 2025, Barker added. "We definitely need infrastructure," he said, adding that a pipeline will be needed to connect to the German refinery Bayernoil and a port to cover the demand the company cannot meet from domestically produced hydrogen.

Earlier this month, Germany's Economic Affairs Ministry approved the construction of the country's first hydrogen pipeline network. It also announced an action plan to support small and medium-sized companies as they switch to climate-neutral production, including expanding hydrogen infrastructure.

More is required to accelerate investments in hydrogen, including a Hydrogen Act to cut bureaucracy and regulate the hydrogen ramp-up quickly, utility industry association BDEW said earlier this month.

"2023 must provide new impetus for investments in renewable energies, hydrogen, hydrogen-capable gas-fired power plants and energy networks," BDEW president Kerstin Andreae said.

We remind, Evonik has concluded the divestment of its triacetonamine (TAA) derivatives business to Italian chemical company Sabo. Financial details were not disclosed. The deal had been announced in October. Production sites in Marl, Germany and Liaoyang, China as well as 250 employees were included in the transaction.

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A Russian court has ordered nearly USD500 mln of assets belonging to German industrial gases company Linde to be frozen at the request of a Russian joint venture building a gas complex at the Baltic Sea port of Ust-Luga, court filings showed, said Reuters.

RusKhimAlyans, the joint venture which is 50% owned by Russia's Gazprom, asked the Court of Arbitration of St Petersburg and the Leningrad Region to freeze Linde assets worth USD488 mln as a preventative measure.

In 2021, Linde and Renaissance Heavy Industries signed an engineering, procurement and construction (EPC) contract with Gazprom and its partners for the Ust-Luga gas complex. Linde notified the customer in May and June 2022 that it had suspended work under the contract due to European Union sanctions imposed after Russia's invasion of Ukraine.

RusKhimAlyans alleges, according to the document, that EU sanctions ban supplying equipment for the LNG plant but do not cover equipment required for the other part of the Ust-Luga complex - a gas processing plant.

RusKhimAlyans intends to apply to the Hong Kong International Arbitration Centre to recover advance payment and losses worth around 972 MM euros (USD1 bn) and 7.6 B roubles, according to the court filings.

Linde did not immediately respond to an email seeking comment.

We remind, Linde, the world’s largest industrial gases company, said on Tuesday it has started producing green hydrogen at its facilities in Greece. Green hydrogen is made from water by electrolysis using renewable wind and solar power. The U.S.-German company, which supplies gases such as oxygen, nitrogen and hydrogen to factories and hospitals, said it was the first green hydrogen production in Greece. Hydrogen is key in Europe’s energy transition to a sustainable environment and net zero emissions by 2050.

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Maire Tecnimont announced that its subsidiaries Tecnimont, KT-Kinetics Technology and Stamicarbon have been awarded several new contracts for licensing, engineering services, engineering and procurement (EP) and engineering, procurement and construction (EPC) activities, for an overall value of approximately USD280 mln, said Hydrocarbonprocessing.

These contracts have been granted by international clients mainly in North America and Latin America, Africa, and the Far East.

In particular, Stamicarbon, the innovation and license company of Maire Tecnimont Group, has been selected as the licensor for a major urea project in China. The plant’s capacity of 3,791 metric tons per day makes it the largest urea plant to be ever licensed by Stamicarbon in China.

Alessandro Bernini, Maire Tecnimont Group CEO, commented: “These new value-added, higher margins contracts further consolidate our Group’s positioning in the global natural resource transformation market and provide strong evidence of the resilience of our technology-driven business model, leveraging on our companies’ distinctive competencies."

We remind, Maire Tecnimont’s subsidiary NextChem, through the associate company GCB Polymers, inaugurates a new re-processing and upcycling plant for polymers today in the Kezad Industrial Zone, in the UAE capital city Abu Dhabi. This new plant processes a very wide range of polymer products, from near to prime to the lower end of plant scraps, post-industrial and post-consumer waste, and also recycled polymers.

Maire Tecnimont S.p.A., a company listed on the Milan Stock Exchange, heads an international industrial group that is a leader in the transformation of natural resources (plant engineering in downstream oil & gas, with technological and execution competences). Through its subsidiary NextChem, it operates in the field of green chemistry and the technologies to support the energy transition. Maire Tecnimont Group operates in about 45 countries, through approximately 50 operative companies and about 9,300 people.

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ExxonMobil has initiated legal proceedings against the European Union to try to stop a proposed windfall tax on fossil fuel companies, arguing Brussels has exceeded its legal authority, said Upstreamonline.

In September, European Commission President Ursula von der Leyen announced the plan to impose a 33% “solidarity contribution” after oil and gas companies posted record profits in 2022.

The EC pledged to use the expected revenue of EUR25 billion (USD26.6 billion) to “help bring down energy bills”.

ExxonMobil reported a third-quarter profit of almost USD20 billion in October but a spokesperson described the EU measure as “counter-productive”.

We remind, strike action at Exxon Mobil’s 270,000 bpd Fawley oil refinery in southern England is set to resume on Jan. 9, a GMB union spokesperson said this week. GMB and Unite union members began the strike on Nov. 21, which was suspended on Dec. 12 for the remainder of the year. The strike was continuous except for a three-day hiatus for negotiations on Dec. 5-7, the spokesperson said.

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U.S. production of major plastic resins totaled 7.2 billion pounds during November 2022, a decrease of 1.9 percent compared to the prior month, and decrease of 5.4 percent compared to the same month in 2021, according to statistics released today by the American Chemistry Council (ACC).

Year-to-date production was 85.3 billion pounds, a 2.6 percent increase as compared to the same period in 2021.

Sales and captive (internal) use of major plastic resins totaled 7.5 billion pounds during November 2022, an increase of 1.5 percent compared to the prior month, and a decrease of 0.6 percent from the same month one year earlier. Year-to-date sales and captive use were 85.1 billion pounds, a 4.2 percent increase as compared to the same period in 2021.

We remind, U.S. Chemical Production Regional Index (U.S. CPRI) fell by 0.4% in November following declines of 0.4% in September and 0.3% in October. Chemical output was lower than a month ago in all regions, with the largest declines in the Gulf Coast, home to much of the nation’s basic industrial chemical and synthetic materials capacity. The declines reflect sluggish output in several end-use manufacturing industries and weak export markets.
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