- This content was produced in Russia, where the law restricts coverage of Russian military operations in Ukraine.
Russia tightened its gas squeeze on Europe on July 25 as Gazprom (GAZP.MM) said supplies through the Nord Stream 1 pipeline to Germany would fall to just 20% of capacity.
Gazprom said flows would drop to 33 million cubic metres every day from 0400 GMT on Wednesday – a 50% cut of the current, already lowered level – because it intended to terminate the operation of a Siemens gas turbine at a compressor station on orders from an industry watchdog.
Germany insisted it found no technical reason for the most recent reduction, which comes as Russia and the West exchange economic blows in response to what Moscow refers to as its special military operation in Ukraine.
The Dutch front-month gas contract, the European benchmark, closed with a 9.95% rise on news of the most recent blow to Nord Stream 1. The pipeline, which holds a capacity of 55 billion cubic metres every year, is the single largest Russian gas link to Europe.
In that context, the European Union has constantly accused Russia of applying energy blackmail, while the Kremlin says the shortages have been because of the effect of Western sanctions and maintenance issues.
Politicians in Europe have said Russia could discontinue gas flows this winter, which would push Germany into a recession and lead to surging prices for consumers already struggling with soaring prices for energy and food.
Germany was pushed last week to disclose a $15 billion bailout of Uniper (UN01.DE), its largest company importing gas from Russia.
Putin Warned About Effects Of Sanctions On Global Oil Prices
President Vladimir Putin had warned of the latest cut, warning the West this month that continuous sanctions risked sparking off crippling energy price rises for consumers across the world.
Russia had already stopped flows through Nord Stream 1 to 40% of capacity last month, citing the rescheduled return of a turbine that was being maintained by Siemens Energy (ENR1n.DE) in Canada – an explanation that Germany rejected as false.
It then shut Nord Stream 1 completely for 10 days for annual maintenance in July, reopening it last Thursday still at 40% of normal levels. The servicing of that first turbine is still a subject of debate as it works its way back to Russia through a mass of paperwork and conflicting statements.
Gazprom said on July 25 it had gotten documents from Canada and Siemens Energy (ENR1n.DE) but “they do not remove the previously identified risks and raise additional questions”.
It said there were also still disputes over EU and UK sanctions:
“The resolution of which is important for the delivery of the engine to Russia and the urgent overhaul of other gas turbine engines for the Portovaya compressor station.”
Siemens Energy said the transport of the serviced turbine to Russia could begin right away and was up to Gazprom to decide. It added:
“The German authorities provided Siemens Energy with all the necessary documents for the export of the turbine to Russia at the beginning of last week. Gazprom is aware of this. What is missing, however, are the customs documents for import to Russia. Gazprom, as the customer, is required to provide those.”
In that context, the German company said it found no connection between the turbine issue and the gas reductions administered or declared by Gazprom. Gazprom did not promptly reply to a request for comment.
The Kremlin said earlier that Moscow did not intend to completely terminate Russian gas supplies to Europe, which is struggling to fill up its underground storage ahead of the peak demand winter season.
This disruption has increased the risk of gas rationing in Europe, with the European Union suggesting to member states last week that they reduce gas use by 15% between August and March in comparison with the same period of past years.
Russia is the world’s second-biggest oil exporter behind Saudi Arabia and the world’s biggest exporter of natural gas. Europe imports almost 30% of its oil and 40% of its gas from Russia.