Russia suspends gas exports to Europe via Nord Stream for an indefinite period

On Friday, Russian state-owned energy giant Gazprom said it would not resume gas supplies through the pipeline on Saturday as planned because it discovered an oil leak at its Portovaya compressor station. The pipeline has been closed since Wednesday for maintenance.

It does not specify a time frame for exports to resume.

“Until issues related to the operation of the equipment are resolved, gas supplies to the Nord Stream gas pipeline have been completely stopped,” Gazprom said in a statement.

Nord Stream 1 pipeline is a key artery for the vast supply of Russian gas to Europe, which accounted for about 35% of all Russian gas imports to Europe last year.
It flows straight into Germany, the bloc’s largest economy, which especially dependent on Moscow gas to power their homes and heavy industry.

But Russia has been in an energy showdown with Europe ever since it invaded Ukraine in late February.

The news of the lockdown extension came on the same day that the largest economies in the West agreed to lockdown. Russian oil price ceiling in an attempt to limit Moscow’s ability to finance its war while keeping global inflation down. This could result in countries blocking insurance coverage or funding for oil supplies.

Russia has already threatened to retaliate by banning oil exports to countries that have imposed a price ceiling.

The Nord Stream 1 pipeline also plays a central role in the ongoing economic conflict between Russia and the West.

Since June, Gazprom has reduced flows through Nord Stream 1 to only 20% of its capacityciting maintenance problems and a dispute over a missing turbine subject to Western export sanctions.
He also stopped deliveries to several “unfriendly” European countries and energy companies for their refusal to pay for gas in rubles, as the Kremlin insists, and not in euros or dollars specified in the contracts. European leaders called these demands blackmail.
Earlier this week, Gazprom announced that suspend all deliveries into French Engie (AEGEUS) since Thursday, stating that it had not received full payment from the company for the gas delivered in July.

Engi said the outage was the result of “disagreements between the parties over the application of the contracts.”

Another reduction in gas supplies is the last thing Europe needs as winter approaches, when the need for energy increases.

The block may have increased imports gas from alternative suppliers and has already exceeded the planned storage volumes, but a further reduction in supplies may lead to an even greater increase in wholesale gas prices, which are included in retail prices.

Consumer price inflation in the 9 countries that use the euro hit 9.1% last month – the highest level in 25 years – according to initial estimates from the EU statistical office.

Energy prices were the biggest contributor to inflation, rising 38% year-on-year through August.

But German Chancellor Olaf Scholz said earlier this week that his country was “much better prepared” to provide enough gas for the winter than could have been imagined a few months ago.

“We are quite capable of dealing with the threats coming from Russia,” he said.

Alex Stumbo, Julia Horowitz, Michelle To Eyad Kurdi, Rob North and Inke Kappeler contributed reporting.

Leave a Reply

Your email address will not be published. Required fields are marked *