Manufacturers Brace for Nord Stream Repairs, Fearing Pipeline Won’t Reopen

Yara, which has 15 production sites across Europe, uses natural gas to produce ammonia, the key ingredient for nitrogen fertilizer. Yara in the first week of July was running its ammonia operations at close to full production, but Mr. Holsether said the company can ramp down and import ammonia from its other sites in markets around the world where natural gas is more plentiful. The company has taken that step several times over the past year when confronted with spikes in Europe’s natural-gas prices. There are limits to the company’s flexibility, Mr. Holsether said.

“Ammonia-producing assets aren’t really designed to be ramped up and down with fluctuating prices,” he said.

German manufacturers, the motor of European industry, are rushing to prepare for a possible Russian cutoff.

Hamburg-based Aurubis AG , one of the largest copper producers in Europe, said it was looking to substitute gas with electricity and oil. Gas, however, remains the key fuel for many of its processes and cannot be replaced in the short term, including for some of the work at its Hamburg smelter where more than 2,000 workers produce wires, cathodes and precious metals.

The switch to alternative energy sources has been further complicated by the global supply-chain disruptions. Aurubis estimates the shift could take up to a year.

German company Ritzenhoff AG operates in one of the world’s most energy-intensive industries: glass making. Most of the energy consumed in glass manufacturing comes from natural-gas combustion used to heat furnaces to melt raw materials and form glass. The gas keeps what Axel Drösser, the chief executive, describes as a “glass soup” boiling in tanks at over 2,700 degrees Fahrenheit.

“Natural gas cannot be substituted here. If there is no gas, the ovens have to be switched off and production comes to a standstill,” he said. In the event that production shuts down, the tanks could be damaged if left idle.

Mr. Drösser said the company, which sells its wares in more than 100 countries, has been trying to reduce its gas consumption including by using some hydrogen. “However, an ad hoc substitution of gas in glass production is not possible with the given infrastructure,” he said.

The Coatinc Company Holding GmbH, one of Germany’s oldest family-run businesses at over 500 years old, provides a crucial service for many industries using steel: galvanizing, or dipping the steel into molten zinc in huge kettles, to prevent corrosion. To melt the zinc, it is 90% dependent on gas.

While Coatinc is looking to switch to electricity longer term, it would take a few years and an investment of around 16 million euros, equivalent to $16.4 million.

But if the gas stops this winter, so will the company’s production. In that case, Paul Niederstein, the executive manager, hopes he would have two weeks’ notice so that the firm can pump out some 7,000 tons of liquid zinc from the kettles, cool it down and store it.

Mr. Niederstein said he is currently trying to persuade German authorities, who would decide who gets gas in the case of rationing, that his industry is critical and should be given priority.

“Galvanized steel is used to construct solar fields and other renewable-energy infrastructure,” he said. “We’re not making chocolate here.”

Some companies that had planned to use gas instead of oil or coal as part of plans to reduce carbon-dioxide emissions are now backtracking because of the looming gas shortage.

Volkswagen AG operates two coal-fired power plants at its headquarters in Wolfsburg, Germany, which provide heat and power for the plant and the city. In 2018, VW said it would invest €400 million to shift to gas, saving 1.5 million metric tons a year in CO2 emissions.

The shift was expected to be completed by the end of this year. But after Russia’s invasion of Ukraine and the subsequent gas-supply crisis, VW CEO Herbert Diess said the company could prolong the use of coal.

Source: WSJ