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Russia cuts gas to Europe amid war and price dispute

36 minutes ago

Credit, EPA

photo caption,

Gazprom’s headquarters in Saint Petersburg seen from an oil pipeline

Contrary to what was announced, the gas pipeline linking Russia and Germany will not be reopened this Saturday (3/9), according to Gazprom, the Russian state energy company.

The company said it found an oil leak in one of the Nord Stream 1 pipeline’s turbines, meaning it will be closed indefinitely.

The pipelines had already been closed for the last three days to, according to Gazprom, carry out maintenance services.

According to the Financial Times, Gazprom had already been reducing gas shipments over Nord Stream 1 since June. In those months, the gas supply reached only 20% of the normal volume.

The latest news comes amid growing fears that residents of the European Union (EU) will not be able to afford heating costs over the coming winter.

Energy prices have soared since Russia invaded Ukraine — and shortages in supplies could add to energy bills.

Before the invasion of Ukraine, Russia supplied 40% of the gas used in the rest of the European continent.

Europe is trying to find new alternatives to Russian energy in an effort to reduce Moscow’s ability to finance the war.

But the transition to other vendors may not happen quickly enough.

EU Council President Charles Michel said the recent announcement was “unfortunately not a surprise”.

“Using gas as a weapon will not change the EU’s resolve. We will accelerate the path to energy independence. Our duty is to protect citizens and support Ukraine’s freedom,” he wrote on Twitter.

The Russian government denies using the energy supply as a kind of economic weapon in retaliation for sanctions imposed after the invasion of Ukraine.

Moscow points out that economic sanctions have delayed the routine maintenance of Nord Stream 1. The EU, for its part, understands that this justification is just a pretext.

Germany’s grid regulator, the Bundesnetzagentur, said the country was now more prepared for the end of Russian gas supplies, but urged citizens and businesses to reduce energy consumption in the coming months.

Credit, Gazprom

photo caption,

Gazprom released a photo of the oil spill

Gazprom’s announcement came shortly after the G7 nations agreed to cap the price of Russian oil as a way of supporting Ukraine.

The G7 (Group of Seven) is made up of the United Kingdom, United States, Canada, France, Germany, Italy and Japan.

The introduction of a price cap in this sector means that countries that adopt this policy will only be able to buy Russian oil products transported by sea that are sold at or below the stipulated value limit.

Russia says it will not export oil to countries that participate in this new policy.

The Nord Stream 1 pipeline stretches from the Russian coast near the city of Saint Petersburg to northeastern Germany and can transport 170 million cubic meters of gas per day.

This immense structure is operated by the company Nord Stream AG, whose majority shareholder is Gazprom.

Germany had also previously supported the construction of a parallel pipeline — the Nord Stream 2 — but the project was halted after Russia invaded Ukraine.

Gazprom said the failure was detected at the compressor station at the Portovaya terminal and the problem was assessed in partnership with technicians from Siemens.

Representatives of the state-owned company informed that the correction of oil leaks in the main engines can only be done in specialized workshops, which were hampered by economic sanctions announced by several countries during the war.

However, Siemens countered that “such leaks normally do not affect the operation of a turbine and can be sealed on site”.

“It is a routine procedure within the scope of maintenance work,” the company said.

This is not the first time since the invasion of Ukraine that the Nord Stream 1 pipeline has been closed.

In July, Gazprom completely cut off supply, citing “a maintenance break”.

Work resumed again ten days later, but at a much reduced level.

Speaking to the BBC from Bern, Switzerland, economist and energy analyst Cornelia Meyer believes that the gas supply shutdown will have a major economic impact.

“This announcement has huge repercussions for gas in Europe, which is about four times more expensive than it was a year ago. The cost-of-living crisis will get worse, because it’s not just gas that increases in price,” he said.

“The gas becomes fertilizer and is used in many industrial processes, so it will affect costs and jobs.”

Oil platform

Credit, Getty Images

photo caption,

The gas supply cut comes shortly after the G7 announced a policy limiting the sale price of Russian oil.

Analysis by Theo Leggett, BBC News Business Correspondent

The gas flow through Nord Stream 1 had already been reduced to a “relative drip”. Now, once again, it has been stopped completely.

It’s all related to an oil spill, says Gazprom — which previously attributed the reduced flows in previous months to technical issues related to economic sanctions.

Europe, however, believes that President Vladimir Putin uses gas supplies and deliberately limits flows through the pipeline to raise prices in order to test the resolve of Russia’s critics.

The result, as we’ve already seen, is rising energy costs — with businesses and consumers paying a very high price.

The moment of change at Gazprom is certainly interesting. It comes on the same day that the G7 announced measures to limit the price of Russian oil exports.

The announcement also comes just after Germany — which relies heavily on Russian gas — revealed that winter stockpiles were filling up faster than expected.

A cynic might interpret this as the last opportunity to tighten the bolt, aiming to inflict maximum damage in the colder months ahead.

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The article is in Portuguese

Tags: Russia cuts gas Europe war price dispute

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