Europe on edge as Nord Stream Russian gas link enters shutdown

Shutting of Nord Stream 1 for annual maintenance may be extended, fears EU

The biggest single pipeline carrying Russian gas to Germany began annual maintenance on Monday, with flows expected to stop for 10 days, but governments, markets and companies are worried the shutdown might be extended because of the war in Ukraine.

The Nord Stream 1 pipeline transports 55 billion cubic metres (bcm) a year of gas from Russia to Germany under the Baltic Sea. Maintenance lasts from July 11 to 21.

Operator Nord Stream AG confirmed the shutdown started as planned at 0600 CET (9:30 am IST) and that gas flows would drop to zero a few hours later.

Last month, Russia cut flows to 40 per cent of the pipeline’s total capacity, citing the delayed return of equipment being serviced by Germany’s Siemens Energy in Canada.

Canada said at the weekend it would return a repaired turbine, but it also said it would expand sanctions against Russia's energy sector.

Europe fears Russia could extend scheduled maintenance to restrict European gas supply further, throwing plans to fill storage for winter into disarray and heightening a gas crisis that has prompted emergency measures from governments and painfully high bills for consumers.

German Economy Minister Robert Habeck has said the country should confront the possibility that Russia will suspend gas flows through Nord Stream 1 beyond the scheduled maintenance period.

“Based on the pattern we've seen, it would not be very surprising now if some small, technical detail is found and then they could say ‘now we can't turn it on any more’,” he said at an event at the end of June.

Germany has moved to stage two of a three-tier emergency gas plan, which is one step before the government rations fuel consumption.

It has also warned of recession if Russian gas flows are halted. The blow to the economy could be 193 billion euros ($195 billion) in the second half of this year, data from the vbw industry association of the state of Bavaria showed last month.

“If Nord Stream gets cut off, or if Germany loses all its Russian imports, then the effect will be felt on the whole of north-western Europe,” said Dutch energy minister Rob Jetten.

Extended could also result in more Russian gas production shut-ins, relative to the 9 per cent year-on-year decline in Gazprom production reported so far this year, Goldman Sachs said.