Commission: Natural gas supply via Nord Stream is not expected to resume

LAST UPDATE 13:52

The European Commission does not expect natural gas supplies to Europe from Russia via the Nord Stream pipeline to resume when its scheduled maintenance is completed, Commissioner Johannes Hahn said.

“We are working with the scenario that (the pipeline) will not return to operation,” he told reporters on the sidelines of a conference in Singapore.

The pipeline was closed a week ago for maintenance expected to last 10 days, and is scheduled to reopen on June 21.

The shutdown has sparked fears in Europe that the Kremlin could end supplies through the pipeline in retaliation for sanctions over the invasion of Ukraine.

Commissioner for Budget and Management Hahn was in Singapore to promote an investment and recovery plan for the European Union.

The EU expects to draw around €800 billion from domestic and foreign investors in the coming years.

Besides, the Commission is expected tomorrow Wednesday to present its plan for a coordinated reduction in natural gas demand to ease the pressure from a possible interruption from Moscow. It is also considering a series of proposals to member states, including a voluntary reduction in the use of cooling and heating. The Commission may also ask to be given the right to impose consumption cuts should the need arise later.

At the same time, natural gas prices rallied after three days of declines, with the market focusing on supply risks from Russia and a major heat wave affecting parts of the region.

Some analysts are skeptical that the pipeline will return to normal flow once maintenance work is completed this week.

“Now that Germany and Canada have reached an agreement on sanctions to restore the turbine that powers the Nord Stream 1 pipeline, it will be interesting to see what other reasons Gazprom will use to justify the above violence,” he said. Gas Vista analyst.

Meanwhile, extreme heat continues to plague Western Europe, increasing the need for cooling and electricity.

Temperatures in parts of the UK, including London, could reach a record high on Tuesday.

Paris and Amsterdam are expected to record temperatures slightly below the record level.

Dutch futures rose 1.4% to 159.50 euros per megawatt hour in Amsterdam trading.

“The turbine is not a necessary component”

It is recalled that the Russian argument for the further reduction of flows in June concerned a Nord Stream turbine, which had been sent for repair to Canada and was blocked there due to sanctions, disputed by Germany.

A representative of the German Ministry of Economy in today’s briefing stated that the turbine that was maintained in Canada and according to Russian sources has been in Germany since last night, is a spare and is not a necessary part, as claimed by the Russian side. The spokeswoman clarified that it is intended to be used in September and that this is a pretextual excuse by Gazprom to justify limiting the flow of natural gas, perhaps even turning off the tap from next Thursday or Friday.

Gazprom and “force majeure”

It is recalled that yesterday the Russian Gazprom invoked “force majeure” for natural gas deliveries to at least three of its customers, one of which is Uniper in Germany. As it stated in its letter, Gazprom cannot fulfill its logistics obligations due to “extraordinary” circumstances beyond its control. According to people with knowledge of the matter who spoke to Bloomberg on condition of anonymity, the move by the Russian energy giant likely signals that Moscow will keep gas flows to Europe reduced.

Specifically, in a letter sent on July 14 to at least 3 of its customers, Gazprom said that the legal term for “force majeure” that limits gas shipments to Europe applies to last month and the current month.

For its part, Uniper, the natural gas operator in Germany informed that it was one of the recipients of the Russian letter, but that it “considers it unjustified and has officially rejected the allegation of force majeure”.

Invoking force majeure is used when a business is hit by a situation beyond its control to protect it from potential damages for breaching agreements, likely to escalate tensions between Russia and the West.

“It looks like a sign that low flows will continue for longer than (Nord Stream’s) planned maintenance period,” Trevor Sikorski, head of natural gas and coal at Energy Aspects, told Bloomberg.

The European Union, which has imposed sanctions on Moscow, has set a goal to stop using Russian fossil fuels by 2027, but for now it wants its supplies to continue as it cannot replace Russian energy.

Russian natural gas supplies have been reduced since May, including through Ukraine and Belarus, but also through Nord Stream 1.