Jul 19, 2022
Gazprom poised to restart gas flows through Nord Stream
Europe could enter a recession next week if the Nord Stream pipeline stays offline: Jeffrey Kleintop
Gazprom PJSC is poised to restart gas exports through its Nord Stream pipeline to Europe on Thursday at reduced capacity, according to people familiar with the matter.
Shipments will resume when maintenance ends on Thursday, but remain below normal after the Russian gas giant declared force majeure on some European clients, said the people, who asked not to be named because the information is private. Flows via Russia’s biggest link to Europe were capped at 40 per cent of capacity before the work.
President Vladimir Putin suggested flows will restart, but warned that delays in receiving a turbine vital to supply the pipeline could lead volumes to be cut to only 20 per cent of capacity as soon as the end of this month, when another unit is due for maintenance. The turbine was sent to Canada for repairs and held up there by sanctions.
“Only two are operating” now, he said of the turbines in televised comments to reports after a summit in Iran late Tuesday. But if the unit coming back from Canada doesn’t arrive in time to replace the one due to be sent for repairs, he warned, “just one will function, so 30 million cubic meters will be pumped per day.”
Dependent on Russian gas, Europe is on tenterhooks to see whether flows resume on Thursday or not as maintenance is due to end. A total cutoff would be catastrophic for European industry, and raises the prospect of rationing and shutdowns this winter. The gas fight is even undermining the euro currency, and the European Commission is scrambling to find ways for the bloc cut its consumption.
Strengthening Moscow’s hand, surging gas prices have allowed Gazprom to meet its full-year target for export revenues from key markets in just five months, one of the people familiar with the matter said.
A decision to declare force majeure on shipments to several European clients on July 14 fueled speculation that the gas wouldn’t come back.
Still, the spat over the turbine that was caught up in Canadian sanctions appears to be on its way to resolution after diplomatic efforts by German Economy Minister Robert Habeck. And in another potentially positive signal, some small gas volumes were sent through the link on Tuesday, which the operator said were for “technically required pressure equalization.” Nord Stream said on Tuesday it’s sticking to the schedule.
Europe is bracing for the worst: EU Budget Commissioner Johannes Hahn said on Tuesday the bloc is working on the assumption that flows won’t resume. For its part, the German government has said it will wait until Monday at least before assessing whether flows are going to resume or not. That’s to give more time for the pipeline part to make its way back to Russia from Canada.
Reuters reported Gazprom’s plans earlier on Tuesday.