Daily Management Review

Russia Adds To Europe's Energy Crisis With A New Gas Embargo


Russia Adds To Europe's Energy Crisis With A New Gas Embargo
On Wednesday, Russia cut off gas supplies through Europe's main supply route, intensifying an economic battle between Moscow and Brussels and raising the prospect of recession and energy rationing in some of the region's wealthiest countries.
European governments are concerned that Moscow will extend the outage in retaliation for Western sanctions imposed following Russia's invasion of Ukraine, and have accused Russia of using energy supplies as a "weapon of war." Moscow denies this, citing technical reasons for supply cuts.
Nord Stream 1, the largest pipeline carrying gas to Russia's top customer Germany, will be closed for maintenance from 0100 GMT on August 31 to 0100 GMT on September 3.
The president of Germany's network regulator stated that the three-day outage would be manageable if flows resumed on Saturday.
"I assume that we will be able to cope with it," Klaus Mueller told Reuters TV in an interview. "I trust that Russia will return to at least 20% from Saturday, but no one can really say."
Additional restrictions on European gas supplies would exacerbate an energy crisis that has already resulted in a 400% increase in wholesale gas prices since last August, squeezing consumers and businesses and forcing governments to spend billions to alleviate the burden.
In Germany, inflation reached its highest level in nearly 50 years in August, and consumer sentiment deteriorated as households braced for an increase in energy bills. 
Unlike the 10-day Nord Stream 1 maintenance last month, the latest work was announced less than two weeks in advance and is being carried out by Gazprom rather than its operator.
Moscow, which reduced pipeline supply to 40% of capacity in June and 20% in July, blames maintenance issues and sanctions that it claims prevent equipment return and installation.
According to the Interfax news agency, Kremlin spokesman Dmitry Peskov stated on Wednesday that Russia remained committed to its gas supply obligations but was unable to meet them due to sanctions.
Gazprom stated that the latest shutdown was required to perform maintenance on the pipeline's sole remaining compressor at the Portovaya station in Russia, and that the work would be done in collaboration with Siemens experts.
Pipes at the 'Nord Stream 1' gas pipeline's landfall facilities in Lubmin
Siemens Energy, which has previously performed maintenance on the station's compressors and turbines, stated on Wednesday that it was not involved in the maintenance but was ready to advise Gazprom if necessary. 
Since launching its "special military operation" in Ukraine, Russia has also stopped supplying Bulgaria, Denmark, Finland, the Netherlands, and Poland, as well as reduced flows through other pipelines.
On Tuesday, Gazprom announced that it would also suspend gas deliveries to its French contractor due to a payment dispute, which France's energy minister dismissed as an excuse, but added that the country had anticipated the loss of supply. more info
German Economy Minister Robert Habeck, who is on a mission to replace Russian gas imports by mid-2024, stated earlier this month that Nord Stream 1 was "fully operational" and that there were no technical issues, contrary to Moscow's claims.