Why did Russia cut off the gas supply to Europe?

Russia’s decision to indefinitely suspend gas flows to Europe via Nord Stream 1 is seen as another escalation in its policy of inflicting economic hardship on Germany.

Lisi Niesner | Reuters

Europe has been plunged into its biggest energy crisis in decades, with Russia’s natural gas supplies becoming volatile and unpredictable even before the invasion of ukraine began. Now these supplies have completely stopped.

Russia says punitive economic sanctions imposed on it by the West are responsible for the indefinite shutdown of gas supplies through Europe’s main pipeline.

“Pumping problems have arisen because of the sanctions imposed on our country and on a number of companies by Western states, including Germany and the United Kingdom,” the spokesman for the Ministry told reporters on Monday. Kremlin, Dmitry Peskov. according to the Russian Interfax news agency.

When asked if gas pumping through Nord Stream 1 was entirely dependent on sanctions and whether supply would resume if these were lifted or eased, Peskov replied: “Of course. The very sanctions that prevent maintenance units, which prevent them from moving without proper authorization of legal guarantees, which prevent these legal guarantees from being given, and so on.”

“It was precisely these sanctions that Western states introduced that brought the situation to what we are seeing now,” Peskov added.

Coming straight from the Kremlin, such comments represent the clearest indication yet that Russia is seeking to pressure Europe to lift economic measures, taken to punish Russia for its unprovoked invasion of the EU. Ukraine, so that the taps are reopened before winter.

European lawmakers have repeatedly accused Russia, traditionally its biggest energy supplier, is militarizing energy exports in a bid to drive up commodity prices and sow uncertainty in the 27-nation bloc. Moscow denies using the energy as a weapon.

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Russian energy giant Gazprom stopped all exports via Nord Stream 1 from August 31citing maintenance work on its only remaining compressor.

However, while the flows were to resume after three days, Gazprom on Friday mentioned an oil leak for the indefinite shutdown of the pipeline. The shock announcement came on the heels of a joint statement by the G-7 economic powers support a proposal to impose a price cap mechanism on Russian oil.

In what energy analysts see as an escalation in Russia’s attempt to inflict economic pain on the region, the Kremlin has since said that resuming gas supplies to Europe is entirely dependent on the lifting by Europe of its economic sanctions against Moscow.

The halt in supplies via the Nord Stream 1 gas pipeline, which connects Russia to Germany via the Baltic Sea, sent gas prices across Europe skyrocketing on Monday, with many fearing parts of Europe could be forced to ration energy during the winter. It has also heightened the risk of a recession in the region.

Gazprom versus Siemens Energy

Meanwhile, Gazprom Deputy Director General Vitaly Markelov told Reuters Tuesday that gas flows through the Nord Stream 1 gas pipeline would not continue until the German company Siemens Energy repairs the faulty equipment.

Siemens Energy was not immediately available for comment when contacted by CNBC on Tuesday.

However, the company told Reuters it was not currently contracted by Gazprom to carry out maintenance work on the suspected oil leak turbine, but said it was on standby to do so.

Siemens Energy added that he “cannot understand this new representation based on the information provided to us over the weekend”.

Gazprom deputy chief executive Vitaly Markelov told Reuters on Tuesday gas flows through the Nord Stream 1 pipeline would not continue until Germany’s Siemens Energy repaired faulty equipment.

Sascha Schuermann AFP | Getty Images

Mark Dixon, founder of the Moral Rating Agency, a research organization focused on foreign companies in Russia, said Gazprom blaming Siemens Energy for the gas supply cut was “another example of state lying by the Russian Federation”.

“Russia lied in the invasion and has lied ever since,” Dixon said. “Gazprom is Russia, make no mistake about it. It has no choice but to lie in chorus with [Russian President Vladimir] Cheese fries.”

Russia has dramatically reduced gas supplies to Europe in recent months, with flows through the pipeline operating at just 20% of the volume agreed before the indefinite suspension.

“Russia’s decision to cut off gas supplies to the EU again as the region scrambles to fill its stocks ahead of winter is a further escalation of its policy of recent months to inflict economic hardship through repeated supply cuts in Germany, the EU’s largest economy and gas consumer,” analysts at political risk consultancy Eurasia Group said in a research note.

“Sources in Berlin say they are now making all their energy plans for the winter assuming zero supply from Russia,” they added. “This means that the focus will now also be on Central and Southern Europe, which still receives gas from Russia, including via pipeline transit from Ukraine and Turkey.”

Winter is coming

European decision-makers are currently race to secure gas supply to underground facilities in order to have enough fuel to keep the houses warm during the colder months.

Energy analysts say Russia’s latest decision to suspend gas flows through Europe’s main supply route could exacerbate what was already likely to be an extremely harsh winter period.

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“The European energy sector continues to be shocked by price volatility and uncertainty over energy balances for the coming winter,” analysts at energy consultancy Rystad Energy said in a note. research, noting that spot electricity prices in Western Europe have reached “unprecedented levels”. “

“This latest decision has significantly increased the risk that Europe will no longer get gas flows through Nord Stream 1 throughout the winter,” they added.

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