The largest single pipeline carrying Russian gas to Germany began annual maintenance on Monday, with flow expected to be halted for 10 days, but governments, markets and companies fear the shutdown will be extended due to the war in Ukraine could.
The Nord Stream 1 pipeline transports 55 billion cubic meters of gas under the Baltic Sea from Russia to Germany every year. The maintenance lasts from July 11th to July 21st.
Last month, Russia throttled flow to 40 percent of the pipeline’s total capacity, citing the delay in returning equipment being serviced in Canada by Siemens Energy in Germany.
Canada said over the weekend it would return a repaired turbine, but it also said it would expand sanctions on Russia’s power sector.
Europe fears Russia could extend planned maintenance to further cut Europe’s gas supply, mess up plans to fill storage for the winter and deepen a gas crisis that has prompted emergency government action and painfully high bills for consumers.
German Economy Minister Robert Habeck said the country should address the possibility of Russia suspending gas flow through Nord Stream 1 beyond the planned maintenance period.
“Based on the pattern we’ve seen, it wouldn’t be very surprising now if a small, technical detail is found and then they could say, now we can’t turn it on,” he said at an event in late June.
Kremlin spokesman Dmitry Peskov dismissed claims Russia is using oil and gas to exert political pressure, saying the maintenance shutdown is a regular, planned event and no one “invented” repairs.
There are other major pipelines from Russia to Europe, but flows have gradually slowed, particularly after Ukraine halted a gas transit route in May, blaming interference by Russian occupying forces.
Russia has completely halted gas supplies to several European countries that have failed to meet its demand for payment in rubles.
“The last few months have shown one thing: Putin knows no taboos. A complete stop of gas deliveries through the Nord Stream pipeline cannot therefore be ruled out,” said Timm Kehler, Managing Director of the German industry association Zukunft Gas.
Over the weekend, Germany welcomed Canada’s decision to issue a “temporary and revocable permit” to allow the return of equipment for the Nord Stream 1 pipeline.
But Ukraine’s energy and foreign ministries said in a statement they were “deeply disappointed” and called on Canada to reverse a decision they said would amount to adapting sanctions imposed on Moscow “to Russia’s whims”.
Siemens Energy said it is working on further formal permits and logistics to get the equipment in place as soon as possible.
Zongqiang Luo, a gas analyst at consulting firm Rystad Energy, said it was “not impossible” that Gazprom could use any delay as justification for extending the maintenance period.
In recent years, the annual maintenance period at Nord Stream 1 lasted around 10 to 12 days and was completed on time.
It is not uncommon for additional faults to be discovered during routine maintenance on pipelines or gas infrastructure, and operators can prolong outages if necessary.
While a complete gas halt is considered unlikely, Gazprom has not diverted flows via other pipelines, meaning a sustained reduced flow rate is likely, Goldman Sachs analysts said.
Germany has moved to the second stage of a three-stage emergency gas plan, one step ahead of the government’s fuel rationing.
It has also warned of a recession if Russian gas flows are halted. The blow to the economy could total 193 billion euros ($195 billion) in the second half of this year, data from the Bavarian industry association vbw showed last month.
“The abrupt end of Russian gas imports would also have a significant impact on the working population in Germany… Around 5.6 million jobs would be affected,” said vwb Managing Director Bertram Brossardt.
The effects would be even broader. A complete halt would keep European gas prices, which have already plagued industry and households, higher for longer.
Dutch wholesale gas prices, the European benchmark, have risen by more than 400 percent since last July.
“If Nord Stream shuts down or Germany loses all its Russian imports, then the impact will be felt across Northwest Europe,” said Dutch Energy Minister Rob Jetten.
In an interview with Reuters on Thursday, he said the Dutch Groningen gas field could still enlist the help of neighboring countries in the event of a complete disruption in Russian supplies, but ramping up production would pose earthquakes.
Meanwhile, halting deliveries by Nord Stream 1 would hurt both Russia and western Europe because it would lose revenue.
Russia’s Treasury Ministry said in June it expected additional oil and gas revenues of 393 billion rubles ($6.4 billion) compared to the amount projected in its budget plan.
For July she expects 259 billion rubles over her budget plan.
Longer maintenance could also lead to more shutdowns in Russia’s gas production compared to the previously reported 9 percent year-on-year drop in Gazprom production, Goldman Sachs said.
https://www.independent.ie/business/world/europe-on-edge-as-nord-stream-russian-gas-link-enters-planned-shutdown-41829920.html Europe is nervous as Russia’s Nord Stream gas pipeline enters planned shutdown