On Monday, the largest pipeline transporting Russian gas to Germany started its yearly repair, with flows anticipated to cease for 10 days. However, governments, markets, and businesses are concerned that the closure may last longer due to the conflict in Ukraine.
Under the Baltic Sea, the Nord Stream 1 pipeline carries 55 billion cubic meters (bcm) of gas from Russia to Germany each year. From July 11 to 21, there will be maintenance.
Gas flows would cease a few hours after the shutdown began as scheduled at 0600 CET, according to operator Nord Stream AG.
Last month, Russia reduced flows to 40% of the pipeline’s total capacity, blaming the delay in the equipment’s return from Canadian maintenance by German company Siemens Energy.
Canada announced at the weekend that it would return a repaired turbine but would also tighten sanctions on Russia’s energy industry.
Russia could extend planned maintenance to further restrict European gas supplies, which would upend plans to fill storage for the winter and intensify a gas crisis that has already triggered government emergency measures and exorbitantly high rates for consumers.
According to German Economy Minister Robert Habeck, the nation should prepare for the potential that Russia would stop supplying gas through Nord Stream 1 after the intended repair window.
At a gathering at the end of June, he said, “Based on the trend we’ve seen, it would not be very strange now if some little, technical element is uncovered and then they might say “now we can’t turn it on any longer”
According to Dmitry Peskov, a spokesman for the Kremlin, no one was “creating” any repairs, and the maintenance closure was a routine, scheduled event. He also rejected suggestions that Russia was using oil and gas to apply political pressure.
There are other significant pipelines that connect Russia to Europe, but their flows have been gradually decreasing, and in May, Ukraine shut down one of its gas transit routes, accusing occupying Russian forces of interfering.
For failing to pay in roubles as demanded, Russia cut off the gas supply to a number of European nations.
“One thing has become clear in recent months: Putin is not familiar with taboos. Therefore, it cannot be completely ruled out that gas deliveries through the Nord Stream pipeline would stop entirely “Timm Kehler, managing director of the German business group Zukunft Gas.
TRUMPETER TROUBLE
Germany praised Canada’s decision to grant a “time-limited and revocable permit” to allow the return of equipment for the Nord Stream 1 pipeline over the weekend.
The energy and foreign ministries of Ukraine, however, expressed their “great disappointment” and pleaded with Canada to reconsider its decision, which they claimed amounted to adapting the sanctions imposed on Moscow “to the whims of Russia.”
In order to get the machinery in place as soon as possible, Siemens Energy stated that it was working on additional official approvals and logistics.
It was “not unthinkable,” according to Zongqiang Luo, a gas expert at the consultancy Rystad Energy, for Gazprom to exploit any delay as a reason for extending the repair window.
The annual maintenance on Nord Stream 1 has typically taken between 10 and 12 days and has been completed on schedule.
Additional defects are frequently found while doing routine maintenance on pipelines or gas infrastructure, and operators can extend outages as necessary.
While a total gas shutdown is regarded as unlikely, Gazprom has not been rerouting supplies via alternative pipelines, making a sustained lower flow rate plausible, according to Goldman Sachs analysts.
ECONOMIC COLLAPSE
Germany has advanced to stage two of a three-tier emergency gas plan, which comes just before the government begins rationing gasoline use.
In case Russian gas flows are stopped, a recession has also been foreshadowed. The economic hit might be 193 billion euros ($195 billion) in the second half of this year, according to estimates released last month by the state of Bavaria’s vbw business organization.
“The workforce in Germany would be significantly impacted by the abrupt halt of Russian gas imports. The repercussions will affect almost 5.6 million jobs, “said managing director of vwb Bertram Brossardt.
Wider impacts would follow. A complete freeze would prolong the increase in European gas prices, which has already hurt households and industry.
The European standard for wholesale gas prices Dutch prices have increased by more than 400% since last July.
Entire north-western Europe would feel the effects if Nord Stream were to be shut down, or if Germany lost all of its Russian imports, according to Dutch energy minister Rob Jetten.
In an interview with reporters on Thursday, he stated that increasing production would run the danger of creating earthquakes but that the Dutch Groningen gas field could still be used to assist neighboring nations in the event of a complete cutoff in Russian supply.
Both Western Europe and Russia would suffer if the supply through Nord Stream 1 were to stop.
In June, the Russian finance ministry stated that it anticipated receiving 393 billion roubles ($6.4 billion) more in oil and gas revenue than anticipated in its budget plans.
It anticipates 259 billion more roubles in July than what its budget plan predicted.
In addition, given the 9 percent year-over-year reduction in Gazprom production announced so far this year, prolonged maintenance could lead to more Russian gas production shut-ins, according to Goldman Sachs.
