Russia’s Gazprom on July 27 halved the amount of natural gas flowing through a major pipeline from Russia to Europe to 20% of capacity. It’s the latest Nord Stream 1 reduction that Russia has blamed on technical problems but Germany calls a political move to sow uncertainty and push up prices amid the war in Ukraine.
The Russian state-controlled energy giant announced on July 25 that it would slash flows on the Nord Stream 1 pipeline that runs to Germany because of equipment repairs. It’s raised new fears that Russia could completely cut off gas that is used to power industry, generate electricity and heat homes to try to gain political leverage over Europe as it tries to bolster its storage levels for winter.
Nord Stream’s network data and the head of Germany’s network regulator, Klaus Mueller, confirmed the reduction.
“Gas is now a part of Russian foreign policy and possibly Russian war strategy,” Mr. Mueller told Deutschlandfunk radio.
Natural gas prices have surged on Europe’s TTF benchmark to levels not seen since early March and are nearly six times higher than they were a year ago. Soaring energy prices are fueling record inflation, squeezing people’s spending power and heightening concerns that Europe could plunge into recession if it does not save enough gas to get through the cold months.
That fear led E.U. governments on July 26 to agree to reduce natural gas use to protect against further Russian supply cuts.
The draft law aims to lower demand for gas by 15% from August through March with voluntary steps. If there aren’t enough savings, mandatory cuts would be triggered in the 27-nation bloc.
Russia, which has reduced or cut off natural gas to 12 E.U. countries since the war, insists that the new drop-off through Nord Stream 1 is because maintenance is needed on a turbine for a compressor station and another turbine sent for repairs in Canada isn’t yet back in place. It has said the paperwork for the return of the latter turbine has raised questions about Western sanctions.
European leaders and analysts say the reductions are a pretext to try to divide E.U. countries and elevate prices.
“As before, we see no technical cause” for the cuts, German government spokeswoman Christiane Hoffmann said in Berlin, adding that “from our point of view, there is nothing standing in the way of transporting the turbine to Russia.”
“What we are seeing here is actually a power play, and we won’t let ourselves be impressed by that,” she added.
Gazprom’s latest move “seems to support our view that recent Russian cuts in flows are a purposeful deterioration in gas trade due to geopolitical escalations,” James Huckstepp, manager for Europe, Middle East and Africa gas analytics at S&P Global Commodity Insights, said in a research note on JUly 26.
“That being the case, it increases our skepticism around Russian imports in the months ahead,” Mr. Huckstepp said.
Russia recently has accounted for about a third of Germany’s gas supplies. The government said last week that the drop in gas flows confirmed that Germany can’t rely on Russian deliveries, announcing that it would step up its gas storage requirements and take further measures to conserve supplies.