Europe prepares for restart of Russian Nord Stream gas link

  • Annual maintenance is due to end at 06:00 CET on July 21
  • Different signals on the recovery
  • The extension could disrupt the filling of the gas storage

LONDON, July 21 (Reuters) – Europe is worried about the restart of the Nord Stream 1 gas pipeline from Russia after the end of annual maintenance scheduled for Thursday, as governments brace for possible further supply cuts.

A planned outage on the largest pipeline carrying Russian gas to Germany began on July 11 and is expected to end at 06:00 CET (04:00 GMT) on July 21. It transports 55 billion cubic meters (bcm) per year of gas under the Baltic Sea. .

If the shutdown is extended, operator Nord Stream AG should make this clear on its website, where the streams section would indicate either a resumption or zero gas.

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Nord Stream 1 for the past two years has resumed gas deliveries on time after maintenance which takes place every summer.

Last July, the delay in servicing a turbine in Canada and Gazprom’s declaration of force majeure to European customers, meaning it cannot guarantee delivery due to exceptional circumstances, raised fears of an outage. prolonged. Read more

Two sources close to Gazprom’s plans told Reuters on Tuesday that flows were likely to restart at pre-maintenance levels of 40% of the pipeline’s capacity. Read more

The head of Germany’s energy regulator said on Wednesday he expected the pipeline to resume at around 30% capacity based on nominations or requests for gas in Lubmin, where Nord Stream 1 makes landfall in Germany. Read more

There is still time for these nominations to change before the scheduled end of maintenance.

While better than no recovery, gas flows at reduced capacity would still disrupt European storage plans and worsen a gas crisis that has prompted emergency measures from governments and painfully high consumer bills.

TURBINE FLASH POINT

While the West accuses Moscow of using its energy resources as a weapon, some European governments, such as Germany, have said any turbine delays could provide Russia with a pretext to extend maintenance.

Canada said it has issued a permit for the turbine’s return, but it’s unclear when it will reach the Nord Stream pipeline.

Russian President Vladimir Putin also said it was unclear what condition the turbine would return to after repairs in Canada, adding to uncertainty over the restart of the pipeline. Read more

Russia insists it is a reliable supplier and rejects Western accusations that it is using the energy to blackmail Europe. He also accuses the West in supporting Ukraine of waging an economic war against Moscow.

Russian gas giant Gazprom (GAZP.MM) said the turbine was necessary for the safety of Nord Stream 1 and said it had not received documentation from Siemens Energy (ENR1n.DE), which serviced the turbine, that he had to reinstall it. Read more

Gazprom did not comment on its declaration of force majeure, dated retroactively to June 14 when Russia cut gas flows to 40% of capacity, citing the missing turbine. Read more

The traders, speaking on condition of anonymity, viewed the statement as an attempt to shield Gazprom from legal action for breach of contract.

Along with analysts and governments, they also braced for months of tension and possibly variable gas flows.

“With European leaders determined to tighten sanctions against the Kremlin, the likelihood has increased that the Russian government will announce the next step of further reducing gas flows to Europe in response,” said Hans van Cleef, Senior Energy Economist at ABN. Amro, said.

Other analysts also expect flows to be further reduced in the coming months, but note that Russia needs revenue as much as Europe needs gas.

“We believe the most likely scenario is for Nord Stream flows to restart and return to full capacity when Gazprom receives the gas turbine from Siemens, but risks remain of further reductions in the following weeks or months,” they said. analysts at investment bank Jefferies in a note. .

“We believe that Russia’s objective is to prevent Europe from building up gas stocks before winter, to keep gas prices high, to maximize economic damage and to keep the effect leverage. The latter is not achieved if volumes are reduced to zero,” they added.

According to the Finnish research organization Center for Research and Clean Air, Russia earned 24 billion euros ($24.6 billion) from pipeline revenue during the first 100 days of the war in Ukraine (24 February -June 3).

For Europe too, the economic stakes are high.

Around 32% of gas consumption in Europe comes from Russia, 90% of which via pipelines. Russia is also heavily dependent on the European market, with 82% of its pipeline exports to the continent, Barclays analysts said.

The European Commission has said that a complete cut in Russian gas supplies to Europe, if combined with a cold winter, could reduce the EU’s average gross domestic product by up to 1.5% if countries do not prepare in advance.

European Commission President Ursula von der Leyen said on Wednesday that a complete shutdown was “a likely scenario”, with the EU executive proposing a voluntary target for member states to cut gas consumption by 15% by up to 15%. ‘in March.

($1 = 0.9754 euros)

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Reporting by Nina Chestney; additional reporting by Kate Abnett in Brussels, Marwa Rashad in London and Christoph Steitz in Frankfurt and Reuters offices; Editing by Veronica Brown and Barbara Lewis

Our standards: The Thomson Reuters Trust Principles.

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