Russia says it is ready to supply Europe and describes concerns about ongoing turmoil as a “human crisis” caused by Europe.

Bloomberg | Bloomberg | Getty Images

Russia is poised to temporarily shut down the Nord Stream 1 pipeline, the European Union’s largest gas import infrastructure, for annual maintenance. Construction has aroused further disruption to the gas supply, undermining Block’s efforts to prepare for the winter.

Some fear that the Kremlin could use the planned maintenance work to turn off the faucet permanently.

Summer maintenance activities for the pipeline running under the Baltic Sea from Russia to Germany will take place from July 11th to July 21st.

The European government is scrambling to fill underground storage with a supply of natural gas during the winter to provide homes with enough fuel to turn on electricity and keep their homes warm.

The EU, which receives about 40% of its gas through the Russian pipeline, is rapidly reducing its dependence on hydrocarbons in response to President Vladimirputin’s months of onslaught in Ukraine. ..

For political reasons, we cannot rule out the possibility that gas transportation will not be resumed thereafter.

Klaus Mueller

Head of German Energy Regulatory Authority

Klaus Mueller, head of German energy regulators, told CNBC that Russia could continue to squeeze Europe’s gas supply after the planned maintenance work.

Muller of the Federal Network Agency said that once the annual inspections began, gas would not be transported through the pipeline, saying, “Gas transportation may not be resumed for political reasons. It cannot be excluded. “

Analysts at Eurasia Group, a political risk consultancy, agree.

“If Putin wants to play games or attack Europe in pain, and supplies don’t come back after maintenance, plans to fill up gas storage by the end of summer probably won’t work,” said Energy Director. Henning Groystein told CNBC over the phone about the climate and resources of the Eurasia Group.

The Nord Stream 1 pipeline is dominated by Russian gas company Gazprom. The state-backed energy giant did not respond to CNBC’s request for comment.

According to Groystein, one of the key concerns for EU policy makers and the energy sector is that most of the communication with Gazprom has been lost, so “it’s virtually unknown what will happen.”

Previously it was relatively open and was held frequently until May.

Winter supply outlook

The flow of gas pipelines from Russia to Europe has been in the spotlight for the past few weeks, given growing concerns about turmoil.

Russia has reduced gas flow to Europe by about 60%, but it is not yet known when NordStream 1’s gas flow will return to normal levels. Gazprom states that the reduction in flow through the pipeline has delayed the return of equipment served by Siemens Energy of Germany, Canada.

Kremlin spokesman Dmitry Peskov previously claimed that Russia was ready to supply Europe with gas, describing the situation as a “human crisis” caused by Europe. ..

German Minister for Economics Robert Habeck and Prime Minister Olaf Scholz are depicted in a weekly cabinet meeting on July 1, 2022.

Picture Alliance | Picture Alliance | Getty Images

Germany’s economic minister, Robert Habeck, rejected the claim, saying that Russia’s supply restraints were a “political decision” aimed at destabilizing the region and raising gas prices.

At the end of last month, Germany moved to the second so-called “alert level” of the emergency gas program. This measure means that Europe’s largest economy sees a high risk of long-term gas shortages, but believes that markets can manage the turmoil without the need for intervention.

The Eurasia Group said that if Putin adjusted the complete cutoff of gas supply beyond the scheduled end of the Nord Stream 1 pipeline maintenance work, Germany as Groystein described as the “greatest economic war” scenario. Is Level 3 of its three-stage emergency gas program.

At this level, Germany’s Bundesnetzagentur needs to decide how to distribute the gas supply nationwide.

“European Union Hotspots”

“Germany has become a hotspot for the entire EU,” Groystein said. “Germany is Europe’s largest population, largest economy, largest gas consumer, largest single importer of Russian gas and has nine borders. Therefore, everything that happened in Germany is Europe. It will spread to other areas. “

Indeed, German authorities are not alone in deep concern about the prospect of further supply cuts.

In Italy, the EU’s second-largest Russian gas buyer, the government announced last week that it would lend € 4 billion ($ 4.2 billion) to state-owned Gestore dei Servizi Energetici to buy gas to increase its stockpiles. did.

Germany, Italy, Austria and the Netherlands have all shown that coal-fired power plants can be used to compensate for Russia’s declining gas supply.

“That’s the real reason … I think Russia will come back a bit,” Gloystein said. “They want a little bargaining tip to allow Europeans to tighten sanctions and Russians to retaliate with it.”

Russian President Vladimir Putin will attend the IX Forums in the regions of Russia and Belarus via the videolink held in Moscow on July 1, 2022.

Mikhail Metzell | Afp | Getty Images

Groystein said it is unlikely that there will be a complete outage of gas supply through the Nord Stream 1 pipeline for the rest of the year, especially as such a move contradicts Moscow’s own story.

The Kremlin previously argued that the current decline in supply was due to “technical factors” and economic sanctions.

By maintaining at least some of the flow, Russia will benefit from higher prices and will be able to maintain even greater cutoff options later this year, Gloystein said.

Over the past few years, Russian gas flow through the Nord Stream 1 pipeline has returned by the end of July after summer maintenance work, according to German grid data.

Thomas Rodgers, a European gas analyst at energy consultant ICIS, said he did not expect the flow to be completely disrupted, pointing out individual maintenance work completed on time.

“Currently, we don’t see a solution to the compressor problem that seems to have pushed the NS1 flow to this low level, but we don’t expect it to stop completely after this work is done,” he told CNBC. ..

“Recent work on the Turkstream pipeline, which transports Russian gas to Southeast Europe via the Black Sea and Turkey, has recently been completed on schedule and without further interruption.”


By Author

Leave a Reply

Your email address will not be published.