Russian President Vladimir Putin says Nord Stream 1 will come back on line, but at a reduced level. Before it was shut for its planned annual maintenance, natural gas flows were already cut to 40 percent of capacity. Russia’s Gazprom blamed the reduced flows on a turbine that had been sent to Canada for repairs and was not returned because of sanctions against Russia. Since then the German government has secured the return of the Siemens turbine from Canada, but according to Mr. Putin another turbine is now in need of refurbishing. If the second turbine is not secured, the flow will be reduced to 30 million cubic meters per day–less than 20 percent of the pipeline’s capacity of 160 million cubic meters per day. Putin indicated that the quality of the returned gear and other parameters meant the pipeline might still be shut down in the future. One of the five gas pumping units, operated by Siemens Energy, was out of order due to a “crumbling of inside lining” and another was due to be sent for maintenance on July 26.
European nations have been looking for alternative supplies, including seeking more natural gas from suppliers linked to Europe by pipeline, such as Algeria, and by building or expanding more liquefied natural gas (LNG) terminals to receive shipments from the United States and other LNG suppliers. In the meantime, the European Union told its member states to cut gas usage by 15 percent from August to March compared with their average consumption in the same period from 2016 to 2021, as an emergency step. Deliveries via Nord Stream 1, which accounts for more than a third of Russian gas exports to the EU, are to resume on July 21 after annual maintenance has been performed. EU states are trying to ensure storage facilities are 80 percent full by November 1, from about 65 percent full now.
Natural gas prices skyrocketed in volatile trade since the Russian invasion of Ukraine. The front-month gas contract rose above 160 euros per megawatt hour recently—360 percent higher than a year ago but below its March peak of 335 euros. Europe’s gas purchases, at higher global prices, furnished Russia with additional revenue. The International Energy Agency estimates that the additional revenue Russia earned from Europe in the past five months compared to a normal year is more than three times what Russia would earn from Europe in a normal winter. IEA added that since its invasion of Ukraine, the amount of revenue that Russia has collected from exporting oil and gas to Europe has doubled compared with the average of recent years – to $95 billion. Besides those revenues, Gazprom indicated Russian gas supplies to China hit a new daily record as Russia’s capacity to supply China has expanded.
Germany, which is highly dependent on Russian natural gas, is at the second of its three alert stages for a gas shortage. It has not worked out a priority list for rationing gas to industry for its stage 3 alert, thinking that there was time until the winter to plan. In the meantime, Germany’s plan was to hoard gas in storage facilities over the summer, using gas imported from Russia. However, the Nord Stream 1 maintenance shutdown forced Germany to draw down gas from storage last week for the first time since last winter, and months before officials had planned. Germany could keep its remaining 3 nuclear reactors that supply 6 percent of the nation’s electricity on-line that are scheduled to be shuttered at the end of the year to help with the gas flow problems, but the Bundestag has already rejected that option because of objections from Greens.
The restriction of Russian gas since the war began has forced one of Germany’s largest energy providers to near-financial ruin. Germany’s Uniper had used up a 2 billion-euro credit line from the German state-owned investment bank and had applied for more money. Uniper, which is Germany’s largest importer of Russian gas, has had daily losses of tens of millions of euros since Russia cut gas flows to Germany last month, forcing it to buy natural gas from other sources at much higher prices. Natural gas prices have increased steadily since Russia began reducing the amount of fuel it made available for purchase on the short-term market.
Conclusion
Many believe Russia is using energy as a weapon against Europe for its aiding Ukraine militarily and putting sanctions on Russia for its invasion. This was made possible by Europe’s “net-zero” and carbon reduction schemes to comply with their Paris Climate Accords and appease their Greens. Europe is now preparing itself against further cuts of natural gas from Russia by asking people to consume less as “Europe is in the midst of what possibly represents the greatest energy crisis in its history.” This should be a warning to the United States.
Biden is stifling fossil energy production here, depleting our strategic oil reserves that were set up for emergency use, adding regulations to energy production and delivery systems, creating policy and regulatory paths for even more wind and solar power deployment—all toward his end of removing fossil fuels from the U.S. energy system. This is akin to the steps Europe took leading to its energy disarmament. Under President Trump, the United States was energy independent—a goal many American Presidents only dreamed of. President Biden is destroying that achievement and placing the United States in a similar situation as Europe—being dependent on imports from countries that are not our allies—a very serious situation.
