Wed, 28 Sep 2022

FRANKFURT / BERLIN - Russia will halt natural gas supplies to Europe for three days at the end of the month via its main pipeline into the region, state energy giant Gazprom said Friday, piling pressure on the region as it seeks to refuel ahead of winter.

The unscheduled maintenance order on the Nord Stream 1 pipeline, which runs under the Baltic Sea to Germany, deepens an energy standoff between Moscow and Brussels, which has already helped send inflation surging in the region and raised the risk of rationing and recession.

Gazprom said the three-day shutdown was necessary because the pipeline's only remaining gas compressor requires maintenance. The move will bring further disruption, particularly for Germany, which depends largely on deliveries from Moscow to power its industry.

'We are monitoring the situation closely with the Federal Network Agency,' a spokesperson for Germany's economy ministry said.

The shutdown, to run from August 31 to September 2, follows a 10-day scheduled annual maintenance that took place in July, and it raised fears over whether Russia would resume supplies, which have been reduced since mid-June.

Germany already has had to give Uniper - its largest importer of Russian gas and the highest-profile corporate victim of Europe's energy crisis so far - a $15.1 billion (15 billion-euro) bailout after Russia drastically cut flows, forcing it to buy gas elsewhere at much higher prices.

The broader Germany economic impact was highlighted in producer price data on Friday. July saw the highest ever increases, both year-on-year and month-on-month, as energy costs skyrocket.

The Nord Stream pipeline had already been running at just a fifth of its capacity, stoking fears that Russia could stop flows completely heading into the winter heating season and make it more difficult to fill up storage facilities.

Before Gazprom announced the shutdown, gas prices in Europe remained close to five-month highs, while U.S. gas prices reversed course and were up 1.2% after the news.

German dependence

Germany has made targeted efforts to fill up its storage facilities to prepare for winter with levels standing at 78.19% as of August 17, slightly more than the 75.89% for the European Union as a whole.

After maintenance is complete, and 'in the absence of technical malfunctions,' flows of 33 million cubic meters (mcm) a day - in line with current volumes - will resume, Gazprom said.

This would still be just 20% of Nord Stream's full capacity of 167 mcm daily.

Gazprom said maintenance work at the remaining Trent 60 gas compressor station would be carried out together with Siemens Energy. The Russian group has previously blamed faulty or delayed equipment for lower flows. Germany says this is a pretext to hurt its economy.

Siemens, which is in charge of maintaining the Nord Stream 1 turbines, declined to comment.

One of the Nord Stream 1 turbines is currently stuck in Germany after undergoing maintenance in Canada. Germany has said it could be transported any day, but Moscow keeps saying that sanctions imposed by Canada, the European Union and Britain prevented the equipment from being shipped back to Russia.

Earlier, senior German politicians from governing parties rejected suggestions that gas shortages could be alleviated by allowing the suspended Nord Stream 2 pipeline to go into service, something the Kremlin has suggested as a solution.

'I strongly suggest we spare ourselves the humiliation of always asking [Russian President Vladimir] Putin for something that we're not going to get,' said Kevin Kuehnert, the number two official in Chancellor Olaf Scholz's Social Democrats.

'The dependence on him has to end for once and all,' he added in an interview with website t-online.

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