An anxious Europe waits to learn if Russian gas will start flowing again


The Russian newspaper Kommersant reported this weekend that one of Gazprom’s turbines — the one that recently became a geopolitical football — landed in Germany on July 17 and was now on its way back to Russia.

But Russian President Vladimir Putin suggested Wednesday that the Montreal workshop which refurbished the Nord Stream 1 turbine and then returned it to Germany at the behest of the Trudeau government — despite the fact that it was caught up in Canada’s sanctions on Russia in response to its war on Ukraine — might not have done the job properly.

“Now they are saying that they will return these machines, at least one of them,” he told Russian media in a televised event to mark his return from meetings with Iran’s leaders. “But in which quality will they be returned? What are the technical parameters after this repair?”

Putin went on to suggest that “they will turn it off at some point, and that’s it, and Nord Stream 1 will stop, because they came from there, from Canada.”

Russian President Vladimir Putin’s cryptic recent comments about repairs to the Gazprom turbine were interpreted by many as a threat to cut off Europe’s access to Russian gas. (Alexey Maishev, Sputnik, Kremlin Pool Photo via AP)

He did not explain the meaning of that last statement. To many countries in Europe — especially Germany, which continues to depend on Russian gas to heat its homes and run its economy — the meaning seemed clear: Putin was propping up a technical pretext he could deploy in the event the flow of gas is not fully restored at midnight Eastern Standard time.

That’s when the ten-day maintenance period for the Nord Stream One gas pipeline from Russia to Germany officially ends.

The Russian state energy company Gazprom also continued to lay the groundwork for bad faith claims about some technical impediment to delivering gas. Earlier this week, it declared a vaguely-worded “force majeure” — a claim that events beyond its control could prevent it from fulfilling its contractual obligations. 

On Wednesday, Gazprom argued that it still had not received documentation from Siemens Energy Canada it needed to reinstall the returned turbine, one of several that push gas through the pipe that runs under the Baltic Sea from Vyborg, Russia to Greifswald, Germany.

When CBC asked Siemens Canada whether there was any truth to that allegation, a company spokesperson responded with “no comment.”

No guarantees

German Ambassador to Canada Sabine Sparwasser lobbied the government of Prime Minister Justin Trudeau to grant a highly controversial sanctions waiver for the six Nord Stream turbines sent for repair to Canada. She acknowledged that their return won’t ensure Russia responds in good faith and restores the full flow of gas.

“In many, many experts’ opinions, it’s a pretext. But we take away that pretext,” she told CBC News. “We’re delivering the turbine and then we will see whether there is a weaponization of energy by stopping the delivery or not.”

She added that Russia failing to fulfil its gas delivery contract would “harm Russia’s interests in the long run terribly” but is still “entirely possible.”

Sparwasser said Germany is hoping to get enough gas to fill its storage tanks to 80 or 90 per cent capacity before the onset of winter.

On Wednesday, the European Commission (EC) announced that the average level of gas storage for European Union member countries is 64 per cent full — well short of where countries would like to be as cooler temperatures approach.

Some countries, such as Hungary, have tanks less than half-full, while others, such as Poland, are well-stocked (which explains why the Polish government is already pushing back on the EC’s request for member countries to voluntarily reduce gas consumption by 15 per cent).

‘Mind games’

Some analysts who study the Kremlin’s strategy question why Putin would restore full flow to Nord Stream and allow countries such as Germany and Italy to breathe easy about this winter — when, by keeping the supply weak and unpredictable, he could exert political pressure on them and other members of the Western alliance supporting Ukraine’s defence.

“Vladimir Putin’s mind games and gas games are very interesting, and sort of predictable in a sense, because what he’s trying to do is to remind the West that economic warfare can work both ways,” said Michael O’Hanlon, director of foreign policy research at the Brookings Institution in Washington.

“He’s at the point right now where he’s got a lot of foreign reserves, and not much he can do with them, because the sanctions that have been imposed since February have primarily limited Russia’s ability to import, but have not really restricted its ability to export its most important commodities — oil and gas.

A delivery man rides a bicycle along the GUM department store with a Cartier boutique closed due to sanctions in Moscow, Russia, Tuesday, May 31, 2022. Vladimir Putin may be calculating that the revenue lost to Russia’s economy by cutting off Europe’s gas flow may not be as valuable as the political leverage he stands to gain. (Alexander Zemlianichenko/AP)

“Putin’s got plenty of cash. There’s just not much he can do with it. There are even restrictions on what the Chinese have been willing to sell.”

“Russia earning an extra euro of hard currency that it can’t do anything with anyway matters less to Russia than getting the gas matters to Europe.”

The Kremlin is fully aware that if Russia resumes normal gas deliveries, European countries will quickly fill their storage tanks for winter. And as their worries about heating homes and fuelling factories evaporate, so too will Putin’s leverage over them. So he has little incentive to restore full flow.

Putin’s goal: maintaining leverage

Could Putin cut off the flow of gas entirely, as some European leaders have predicted?

Russia has found ready customers for the oil it used to sell to Europe. India has dramatically expanded its oil imports from Russia since the invasion of Ukraine.

But gas, unlike oil, cannot simply be placed in barrels and sent anywhere in the world. Russia’s gas flows through pipelines that run west, not east.

If Russia were to stop exports to Europe, it would soon find itself having to cap wells because its own ability to store gas is finite. That’s a step most producers prefer to avoid because it presents considerable technical challenges and producers can never be assured that the well will return to its old flow rate.

The words “No Money for Murderers, Stop the Oil and Gas Trade” are projected by activists onto the Russian consulate in Frankfurt, Germany, April 4, 2022. (Michael Probst/AP)

The move would also make little sense politically, because Putin would lose the ability to apply pressure to Europe in the future using gas for blackmail.

A total stoppage of gas supplies to Europe is like a bullet that can only be fired once. It would hurt Europe, maybe severely (the European Commission estimates that it would reduce economic output by about 1.5 per cent). But it also would spur Europe to accelerate its efforts to wean itself off Russian fossil fuels entirely, limiting both Russia’s political leverage and its future revenue.

The scramble to find other sources

Those efforts to cut loose from Russian energy are already underway, said Sparwasser. 

“In February, when Russia attacked Ukraine, we depended to around 55 per cent on our gas supplies from Russia. We have been able to reduce that very significantly,” she told CBC News.

“We’re now at 33 per cent but that is still significant and gas is very hard to replace because of the complexity of systems.”

About 40 per cent of German energy now comes from wind, solar and biomass. Those sources can displace the natural gas Germany uses to generate electricity, but not the gas used in industrial processes such as steel-making. Nor can millions of German homes that heat and cook with gas be refitted in time for winter.

Solar panels are installed at a floating photovoltaic plant on a lake in Haltern, Germany. (Martin Meissner/The Associated Press)

So Germany is also working to find more suppliers of gas. 

“We’re trying to get more energy. We ask our friends in the U.S., in Norway, in the Netherlands, in Qatar as well, to increase their exports towards Europe,” said Sparwasser. Germany is also building two new floating liquefied natural gas (LNG) ports to make it easier to receive shipments.

And this week, Germany’s Green Party expressed a willingness to reconsider their questionably-timed vote to close the country’s last remaining nuclear power plants, a vote that undermined the German government’s messaging on the turbine controversy.

‘Russia is blackmailing us’

On Wednesday, European Commission President Ursula von der Leyen gave an overview of Europe’s efforts to diversify its energy supply.

“The gas supply from other sources than Russia have quite impressively increased since January this year by 35 bcm (billion cubic meters) …” she said. “You remember that we had the U.S. agreement on increased supplies on LNG. Norway stepped up considerably. Qatar, the Gulf States, Algeria. I was … in Egypt to sign a MoU on more supplies. We were two days ago in Azerbaijan to sign a MoU on increased supplies.”

A woman and a man are shown at podiums, in front of a screen that says 'Save gas for a safe winter.'
European Commission President Ursula von der Leyen, left, and European Commission Vice President Frans Timmermans unveil plans to reduce natural gas usage ahead of the winter on July 20, 2022 at the EU headquarters in Brussels. (John Thys/AFP/Getty Images)

Von der Leyen added that Europe has brought online about 20 gigawatts of renewable energy since Russia’s invasion, which allowed it to displace another 4 bcm of Russian gas.

She acknowledged that this won’t be enough to close the gap. Last year, Europe burned about 155 bcm of Russian gas.

“Today, we have 12 member states that are hit by a partial or total cut-off of Russian gas supply,” she said. “And overall, the flow of Russian gas is now less than one-third of what it used to be, for example, at the same time last year. Russia is blackmailing us.”

The upper hand

“In the long run, Russian gas is going to become less important to Europe,” said O’Hanlon. “But Vladimir Putin is not necessarily that interested in the long run.

“Putin has the upper hand in the short term. Now, he has to be careful how he plays that upper hand. If he overdoes it, Europe will accelerate its move away from Russia.”

That transition, he said, “would have been the case anyway as Europe moves towards renewables, but now it’s going to be on an accelerated timeline, because of the Ukraine conflict and Europe’s collective efforts to find other sources of natural gas.

“In the medium and long term, Europe has the advantage. But nothing can change the fact that in the winter of 2022-23, Europe will be cold and will go into recession in terms of industrial output if Russia cuts the gas.”

For now, Vladimir Putin has Europe where he wants it — trying to guess his next move. The only thing that anyone outside the Kremlin can be sure of is that it will be Putin, not Gazprom’s engineers, who make that call. And it will be based on his political calculations, not on contractual obligations.

Source link


Please enter your comment!
Please enter your name here