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Business

Cheap oil hits BASF

by Alex Scott
March 7, 2016 | APPEARED IN VOLUME 94, ISSUE 10

The low cost of oil—currently about $37 per barrel—is dealing BASF, the world’s largest chemical company and an oil and gas producer, a series of financial challenges. The firm’s 2015 profits fell 22.7% to $4.5 billion on sales of $79.5 billion, down 5.2%, largely because of the low oil price and slowing growth in China’s economy, Kurt Bock, BASF’s chairman, said at the firm’s recent financial results briefing. If the oil price dips below $30 per barrel, BASF will experience a further decline in profits, Bock said. Oil’s collapse has also forced the firm to reconsider plans to build a major methanol-to-propylene plant in Freeport, Texas. “If the price of oil is low, then it is very competitive against this natural gas process,” Bock said of the proposed plant’s technology. The firm will decide whether to go ahead with the project by the end of June. BASF says it would be its largest-ever single-plant investment.

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