BASF says oil price rises will not be sustained
- 24 February 2011
- From the section Business
Germany chemicals firm BASF has tried to play down fears that already-high oil prices will continue to rise.
BASF, which has oil and gas operations in Libya through its Wintershall subsidiary, said speculation and fear was fuelling the rises in crude prices.
But its chief executive said prices would stabilise as the situation in Libya calmed down.
Juergen Hambrecht made the comments to the BBC as BASF reported strong fourth-quarter results.
BASF said its net profit for the quarter had risen to 1.1bn euros ($1.5bn; £931m), up from 455m euros in the same period a year earlier, as the improving global economy boosted sales.
For the full year the firm reported a net profit of 4.56bn euros, up from 1.4bn euros in 2009.
'Fear priced in'
BASF said it was "concerned" about the situation in Libya, where it has suspended the operations of its Wintershall subsidiary and flown-out all ex-pat employees.
Mr Hambrecht said the situation was "very severe", but also very difficult to judge, as there was a lot of conflicting information coming out of the North African country.
He added that he did not think the oil price would go up "constantly".
"There is a lot of speculation in it, fear priced in," he told BBC World Business Report.
"I believe as we go forward the situation will calm down and the oil price will stabilise again."
"So for the time being I do not see a major impact on our earning power going forward, besides the effect that we stopped production in Libya."
But he added that if oil prices and other factor pushed up inflation rates substantially, this would "eat into" some of its growth.
In its results statement, BASF said it expected "significant sales growth" in 2011.
Mr Hambrecht wrote that he thought BASF was "able to take advantage of the strong economic recovery in 2010, which was more dynamic than we all initially expected".
The company added that it would be able to pass on the costs of increasing raw materials prices to its customers.