what little gas was flowing to Europe, is shut down again,
Fair Use Cited
---------------
Russia Halts Nord Stream Gas Pipeline, Ratcheting Up Pressure on Europe
European nations racing to fill gas storage facilities before onset of winter
By Georgi KantchevFollow
Updated Aug. 31, 2022 9:13 am ET
BERLIN—Russia shut down its main artery for natural gas to Europe for maintenance on Wednesday, in what Western governments see as the latest salvo in the Kremlin’s economic war on the continent.
The halt comes as European nations race to fill gas storage facilities to prevent a shortage in the midst of winter. Shortages would trigger rationing, likely kneecapping industry and tipping the continent’s already struggling economy into a recession.
Moscow has already throttled back deliveries over the Nord Stream pipeline—which links Russia’s prolific Siberian gas fields with Germany under the Baltic Sea—to just 20% of its maximum capacity, citing technical issues with its turbines. European officials have dismissed these explanations and have called the gas cuts an economic attack in retaliation for supporting Ukraine in the war.
On Wednesday, the Kremlin-controlled gas giant Gazprom PJSC said that it had completely halted the Nord Stream pipeline as “scheduled preventive work begins at the gas compressor unit.” The pipeline is due to come back online early on Saturday.
European officials and analysts, however, have questioned whether Gazprom would restart the pipeline as planned. Some expect Moscow to find new technical pretexts to prolong the outage, while others see Gazprom keeping gas flowing at a low level to create uncertainty and manipulate gas prices.
“Gas prices and European sentiment are about to face a major stress test as the Nord Stream pipeline gets shut for maintenance today for three days, and there is growing concern that another reduction in supply or a complete cutoff in flows may follow at the end of the week,” analysts at ING Bank wrote in a report to clients on Wednesday.
Gas prices in Europe, which have traded at record highs in recent weeks, fell on Wednesday, with futures for gas at a trading hub in the Netherlands, the benchmark in northwest Europe, dropping more than 5%.
Gas is a key fuel for the European economy, heating homes and fueling factories such as smelters and fertilizer plants. Soaring prices for electricity have forced some industrial operations in Europe to announce shutdowns in recent weeks, including energy-intensive metal forging operations.
First opened in 2011, the 760-mile-long Nord Stream pipeline has been an important source of gas for Germany, Europe’s largest economy. Before the war, Russia covered over half of Germany’s gas imports, but supply cuts via Nord Stream affect other European customers because Germany exports some of the gas abroad. There are other gas pipelines from Russia to Europe, but Russia has also throttled flows through these in the wake of the war.
Unlike the 10-day annual maintenance in July, the current Nord Stream shut-off caught officials and traders by surprise when it was announced earlier this month. Maintenance operations are usually telegraphed well in advance so that utilities and traders can make alternative arrangements.
While Gazprom restored gas flows following the works in July, it limited supplies just days later, citing technical problems with turbines. The company insists that a key turbine couldn't be sent to Russia after it was maintained in Canada because of international sanctions on Moscow. But Germany, where the turbine was located, said that there are no obstacles and that Moscow was in fact blocking the turbine’s return to Russia.
Kremlin spokesman Dmitry Peskov on Tuesday said nothing will interfere with gas supplies via Nord Stream “apart from technical problems caused by sanctions.”
Gazprom said on Tuesday that it would suspend gas supplies to French utility Engie SA from Thursday over a contractual dispute. Engie said that it had already secured enough gas volumes to ensure supply and has undertaken measures to mitigate any interruption by Gazprom.
While a complete halt of Nord Stream deliveries would worsen Europe’s energy balance during winter when demand is at its seasonal peak, the European Union has been filling its storage facilities faster than expected.
Germany, which has Europe’s largest gas stores, is close to hitting its 85% gas storage target, initially set for Oct. 1. German officials, however, have warned that reaching the next milestone of 95% by Nov. 1 would be challenging unless companies and households cut consumption.
“We can take gas from the storage in the winter, we are saving gas (and need to keep doing so!),” Klaus Müller, the head of the country’s energy regulator, wrote on Twitter on Wednesday.
High gas prices have reduced industrial demand. Increased imports via pipeline from Norway and shipments of liquefied natural gas from the U.S. have put Europe in a stronger position ahead of winter than many analysts forecast when Gazprom first cut supplies through Nord Stream in June. At the same time, there are concerns that supplies from producers besides Russia might not be enough to satisfy European demand later next year.
“Effectively we’ve sacrificed, especially in Germany, industrial consumption over the past month to hit really, really ambitious storage targets,” said Ben McWilliams, an analyst at the Bruegel think tank, adding that the amount of gas in storage makes government-enforced rationing this winter less likely.
For Russia, cutting the supply of gas to Europe isn’t without risk, as the continent has traditionally been Gazprom’s main market and provides a big part of the company’s revenue. Domestic storage, meanwhile, is filling up fast and some gas wells might need to be closed, many of which will be technically difficult to reopen. Russia’s options to reroute the gas flows to Asia or other markets are limited by its traditionally Europe-facing infrastructure.
But despite the limited flows abroad, the company was able to record hefty profits.
“Despite the decline in gas supplies to foreign markets, to markets far abroad, our calculations absolutely clearly show that the financial results of Gazprom, our revenue for 2022, will be significantly higher than in 2021,” Chief Executive Alexei Miller said Wednesday, according to the Russian news agency, TASS.
Russia Halts Nord Stream Gas Pipeline, Ratcheting Up Pressure on Europe
Western governments see the three-day shutdown as the latest salvo in the Kremlin’s economic war on Europe.www.wsj.com
If you put yourself in the position to be blackmailed, sure enough someone will come along and do it to you.
we own our own bog
