The German government on Wednesday said Russia was playing politics with its gas deliveries as shipments via the undersea Nord Stream pipeline fell sharply.
“I have the impression that what happened … is a political decision and not a technically justifiable decision,” German Economy and Climate Minister Robert Habeck said.
Gazprom announced a drop in gas flows from 167 million cubic meters per day through the Russia-to-Germany pipeline to no more than 67 million cubic meters beginning Thursday, blaming the need to stop the operation of two compressors. It said the necessary parts are stuck in sanctions limbo at a maintenance facility in Canada.
That’s adding to the EU’s gas problems following a fire and explosion at Freeport LNG, a key Texas company responsible for much of the seaborne liquefied natural gas (LNG) sailing to Europe so far this year.
“It’s a double whammy to the European gas market,” said Tom Marzec-Manser, head of gas analytics at ICIS. “The combination of the two and the uncertainty that both provide means deliveries into the summer won’t be as high as initially expected … which obviously has repercussions on the availability of gas into the winter.”
Despite those drops in deliveries, the EU is still falling short in its effort to slash Russian gas imports. European Commission President Ursula von der Leyen promised to cut Russian gas from last year’s 155 billion cubic meters (bcm) to about 51 bcm this year, but that pledge is already out of reach.
As of Tuesday, EU countries have already imported 51 bcm via pipeline from Russia, according to the Bruegel think tank in Brussels, which compiles weekly data from European gas grid operators. Ben McWilliams, a research analyst at Bruegel, said that tally didn’t include seaborne Russian LNG, which would add roughly 10 percent to the total.
“Achieving a total reduction equal to two-thirds requires ending all Russian imports tomorrow,” McWilliams said.
The Commission did not respond to a request for comment on how its plans to rely on more American LNG this winter would be affected.
Ties that bind
Although the EU is buying more Russian gas than planned, deliveries are falling.
Gazprom has already ended shipments to Poland, Bulgaria, Finland, the Netherlands and Denmark as well as some supplies to Germany under a contract with Shell Energy Europe after companies refused Moscow’s demand to pay in rubles.
There’s little faith that the Kremlin won’t play politics with its remaining customers.
Gazprom argues that “the untimely return of gas compressor units from repair by Siemens (Germany)” is the reason for the drop in flow through Nord Stream.
Siemens, for its part, said via email that the repair in question can only be carried out at a facility in Montreal — and that Canadian sanctions on exports to Russia are preventing the return of the unit. “Against this background we have informed the Canadian and German governments and are working on a viable solution,” a Siemens spokesperson said via email.
Habeck isn’t buying the explanation from the Russian gas export monopoly.
“The current reports clearly show that the Russian side’s justification is simply a pretext. It is obviously a strategy to unsettle and drive up prices,” he said, adding that Berlin and Brussels have established that “the maintenance of these facilities is not under sanctions. I have also personally confirmed this to Siemens. We are in discussion with the Canadians about the extent to which, according to Canadian legal standards, the sanctions allow that.”
Italy, the second-largest European buyer of Russian gas after Germany, is also feeling the pinch.
“Eni confirms that Gazprom has communicated a limited reduction in gas supplies for today, amounting to approximately 15 percent,” a spokesperson for the Italian company said Wednesday.
The disruptions caused spot gas prices on the EU benchmark TTF hub to surge above €120 per megawatt-hour on Wednesday after weeks hovering in the mid-80s.
The extended outage at the Texas Freeport plant — which has supplied 10 percent of Europe’s imported LNG so far this year — means any plans to ramp up imports of American gas are on hold.
The Freeport outage represents “20 LNG cargoes per month off the global supply,” which will push up prices in Europe and Asia, said Fred Hutchinson, president of the U.S. LNG industry association.
Brussels is actively courting alternate suppliers. On Wednesday von der Leyen signed a deal with Egyptian President Abdel Fattah el-Sisi in Cairo to pipe gas to Israel, where it would be liquefied and delivered via ship to the EU.
Energy Commissioner Kadri Simson will also visit Azerbaijan in July to discuss more gas deliveries through the Trans Adriatic Pipeline landing in Greece and Italy, and continue outreach to Canada, Qatar and Algeria, she told the European Parliament’s energy committee this week.
Laurenz Gehrke and Ben Lefebvre contributed reporting.
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