Nord Stream 1: Gazprom announces indefinite shutdown of pipeline

 

Nord Stream 1: Gazprom announces indefinite shutdown of pipeline

 

Russian energy company had been due to resume gas delivery to Germany on Saturday morning

 

Alex Lawson and agencies

Fri 2 Sep 2022 18.40 BST

https://www.theguardian.com/business/2022/sep/02/nord-stream-1-gazprom-announces-indefinite-shutdown-of-pipeline

 

Russian energy major Gazprom extended the shutdown of gas flows through its key Nord Stream 1 pipeline to Germany on Friday evening, providing no timeframe for a reopening.

 

The move came hours after G7 countries agreed to impose a price cap on Russian oil in an attempt to stem the flow of funds to Vladimir Putin’s regime.

 

Gazprom, the state-owned oil and gas firm, said supplies would remain halted indefinitely after a leak was detected. It said the pipeline would not restart until repairs were fully implemented.

 

Nord Stream 1 is the single biggest pipeline for gas from Russia to Europe and has the capacity to deliver 55bn cubic meters (bcm) of gas a year. Continued supplies through the pipeline are seen as crucial to prevent a deepening of the energy crisis.

 

In a statement on Telegram, Gazprom said: “Gas transportation to the Nord Stream gas pipeline has been completely halted until the complaints on the operation of the equipment have been eliminated.”

 

It said in the social media post it had identified “malfunctions” on a key turbine along the pipeline, which carries natural gas from western Russia to Germany and that the pipeline will not work unless these were eliminated.

 

Early on Wednesday, Gazprom completely halted the flow of gas through Nord Stream 1, in line with an earlier announcement, adding that the stoppage would last for three days. Flows were due to resume just after midnight on Saturday morning.

 

The company said work was necessary on the only remaining functioning turbine at the Portovaya compressor station at the Russian end of the pipeline but German officials cast doubt on that explanation.

 

The timing of the move will raise questions over whether Putin was responding to the impending imposition of a cap on Russian oil. Finance ministers from the UK, US, France, Germany, Italy, Japan and Canada on Friday agreed a plan to put a ceiling on Russian oil prices.

 

The proposal would mean importers seeking shipping services and insurance cover from companies based in G7 and EU countries would need to adhere to a price cap to transport Russian oil. It is likely to be introduced from December.

 

Since the invasion of Ukraine, Putin’s regime has been accused of weaponising gas by reducing supplies into Europe, pushing prices higher and threatening blackouts.

 

Gazprom officials have already indicated they would blame sanctions for disrupting gas deliveries to Europe. In remarks earlier this week, Gazprom chief executive Alexei Miller indicated that manufacturer Siemens could not perform repairs on the turbines used in Nord Stream 1 because of sanctions against the Russian state energy company.

 

The shutoff will add to concerns that Europe, and Germany in particular, will be forced to significantly curtail power usage for households and businesses this year.

 

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European countries have rushed to fill up their gas storage facilities in case Russia shuts off gas supplies completely this winter. Germany’s storage facilities are now more than 84% full.

 

The head of Germany’s network regulatory agency, Klaus Mueller, tweeted that the Russian decision to keep Nord Stream 1 switched off for now increases the significance of new liquefied natural gas terminals that Germany plans to start running this winter, gas storage and “significant needs to save” gas.

 

The European Commission chief spokesman, Eric Mamer, said: “Gazprom’s announcement this afternoon that it is once again shutting down Nord Stream 1 under fallacious pretenses is another confirmation of its unreliability as a supplier.”

 

Jacob Mandel, a senior associate for commodities at energy consultancy Aurora, said the halt of flows through Nord Stream 1 “does not significantly alter the outlook for European imports of Russian gas from the last few weeks”.

 

Mandel said Nord Stream 1 was delivering about 30m cubic meters a day, or 20% of its capacity of 55bcm, before the latest shut down. He said this was equivalent to only about 3.7bcm over the rest of this year or more than 18bcm if it were to run at full capacity. That represents just 4% of Germany’s annual demand and less than 1% of Europe’s annual demand, he said.

 

Mandel added: “That said, supply is hard to come by, and it becomes harder and harder to replace every bit of gas that doesn’t come from Russia.

 

“Europe’s storages are well on track to hitting or even surpassing their targets for this summer, and there’s plenty of scope to replace that gas with liquified natural gas imports for now, but when weather turns cold and demand starts to pick up in the winter in Europe and Asia, there’s only so much LNG out there that Europe can import to replace Russian gas.”