Europe on edge as Nord Stream Russian gas link set for planned shut-down

The biggest single pipeline carrying Russian gas to Germany starts annual maintenance on Monday, with flows expected to stop for ten days, but governments, markets and companies are worried the shut-down might be extended due to 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. It will undergo maintenance from July 11 to 21.

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 may extend the 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.

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Kremlin spokesperson Dmitry Peskov dismissed claims that Russia was using oil and gas to exert political pressure, saying the maintenance shutdown was a regular, scheduled event, and that no one was "inventing" any repairs.

There are other big pipelines from Russia to Europe but flows have been gradually declining, especially after Ukraine halted one gas transit route in May, blaming interference by occupying Russian forces.

Russia has cut off gas supplies completely to several European countries that did not comply with its demand for payment in roubles.

"The last few months have shown one thing: Putin knows no taboos. A complete halt to gas supplies through the Nord Stream pipeline cannot therefore be ruled out," Timm Kehler, managing director of German industry association Zukunft Gas, said.

Turbine trouble

Germany at the weekend welcomed Canada's decision to issue a "time-limited and revocable permit" to allow equipment to be returned for the Nord Stream 1 pipeline.

But Ukraine's energy and foreign ministries said in a statement they were "deeply disappointed" and urged Canada to reverse a decision they said amounted to adjusting the sanctions imposed on Moscow "to the whims of Russia".

Siemens Energy said it was working on further formal approvals and logistics to get the equipment in place as soon as possible.

Zongqiang Luo, gas analyst at consultancy Rystad Energy, said it was "not impossible" Gazprom could use any delay as a justification to extend the maintenance period.

In previous years, the annual maintenance period on Nord Stream 1 has lasted around 10-12 days and has finished on time.

It is not uncommon for additional faults to be detected during routine maintenance at pipelines or gas infrastructure and operators can prolong outages if necessary.

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