Russia is set to switch off the gas for work on a key pipeline — and Germany fears the worst

Russia is set to switch off the gas for work on a key pipeline — and Germany fears the worst

access_time2022-07-07 11:04:31

Russia is poised to temporarily shut down the Nord Stream 1 pipeline — the European Union’s biggest piece of gas import infrastructure — for annual maintenance. The works have stoked fears of further disruption to gas supplies that would undermine the bloc’s efforts to prepare for winter.

Some fear the Kremlin could use planned maintenance works to turn off the taps for good.

The summer maintenance activities on the pipeline, which runs under the Baltic Sea from Russia to Germany, are scheduled  to take place from July 11 through to July 21.

It comes as European governments scramble to fill underground storage with natural gas supplies in an effort to provide households with enough fuel to keep the lights on and homes warm during winter.

The EU, which receives roughly 40% of its gas via Russian pipelines, is trying to rapidly reduce its reliance on Russian hydrocarbons in response to President Vladimir Putin’s months-long onslaught in Ukraine.

Klaus Mueller, the head of Germany’s energy regulator, told CNBC that Russia may continue to squeeze Europe’s gas supplies beyond the scheduled end of the maintenance works.

No gas is expected to be transported via the pipeline once the annual inspection gets underway, Bundesnetzagentur’s Mueller said, adding: “We cannot rule out the possibility that gas transport will not be resumed afterwards for political reasons.”

Analysts at political risk consultancy Eurasia Group agree.

If supply “doesn’t come back after maintenance because President Putin plays games or wants to hit Europe while it hurts, then the plan to fill up gas storage by the end of summer will probably not work,” Henning Gloystein, director of energy, climate and resources at Eurasia Group, told CNBC via telephone.

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

One key concern for EU policymakers and the energy sector more broadly is that they have “virtually no idea as to what will happen” because most communications with Gazprom have now broken down, Gloystein said.

They had been previously been relatively open and frequent until May.

Russia has reduced its gas flows to Europe by about 60%, and it is not yet known when or if Nord Stream 1 gas flows will return to normal levels. Gazprom has cited the delayed return of equipment serviced by Germany’s Siemens Energy in Canada for its reduced flows via the pipeline.

Kremlin spokesperson Dmitry Peskov has previously claimed Russia stands ready to supply gas to Europe, describing the situation as a “man-made crisis” created by Europe.


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