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Aug 22, 2022
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Nord Stream 1 may no longer be launched

The harmless, historically neutral concepts of “repair” and “scheduled maintenance” are becoming real everyday horror stories for Europe. Against the backdrop of news about another, this time a three-day shutdown of the Nord Stream 1 gas pipeline, gas prices on the European market broke the bar of $3,000 per thousand cubic meters for the first time since the beginning of March.

At the opening of trading on Monday, according to the London ICE exchange, September futures jumped to $2,800 dollars, by 11:07 Moscow time they were trading at $2,921, and after another 12 minutes they reached $3,022.4.

Earlier, Gazprom announced its intention to completely shut down the Nord Stream 1 gas pipeline from August 31 to September 2 to repair and maintain the only working Siemens turbine (gas pumping unit) at the Portovaya compressor station. After this period and in the absence of malfunctions, the company intends to restore pumping to Germany at the current level of 33 million cubic meters per day, which is about 20% of the pipeline’s design capacity (167 million cubic meters per day).

Recall that from July 11 to July 21, both Nord Stream-1 strings were also turned off: as the gas pipeline operator Nord Stream AG explained, “to carry out scheduled maintenance work, including testing of mechanical components and automation systems.”

In June, Gazprom reduced gas supplies via Nord Stream 1 by 60%, pointing out the difficulty of repairing equipment due to sanctions. And by the end of July, deliveries fell to 33 million cubic meters, after which in Berlin they started talking about the threat of their complete and irrevocable cessation by Gazprom, the imminent rise in the price of electricity in the country by three times, as well as the halt of a number of industries. And now – a new round of this gloomy “repair” saga, this time associated with the Siemens turbine.

By the way, another Dutch-made turbine for Nord Stream 1 got stuck in Germany: Siemens claims that they are ready to supply a unit previously repaired in Canada to Russia at any time, as soon as Gazprom agrees on customs documents. Well, the Russian company is clearly not in a hurry with this, referring to the ambiguities of the sanctions legislation: it needs confirmation that the turbines that need maintenance will not be subject to the sanctions of Canada, the UK and the EU.

“Gas prices above $3,000 are not yet the limit, since there are no guarantees that the gas pipeline will be launched after the repair of the only remaining turbine,” says Artem Deev, head of the analytical department at Amarkets. – The European authorities are clearly aware of how great the risk of a full-scale energy crisis on the continent is. After all, it is not enough to fill underground storage facilities (UGS) by 100%. Gas is consumed from storage facilities all the time, and not just during the heating season: from autumn to spring, withdrawals from underground storage facilities increase, and the rest of the time, raw materials are withdrawn to supply various industries, for example, for the needs of the chemical industry.”

According to Deev, for a calm passage of winter, a guarantee of stable supplies in the volume necessary for the countries is necessary. And she just doesn’t exist. Therefore, Europe will most likely have to extremely rigidly ration consumption at the household level (requirements have already been voiced to reduce it by 15-20%) and, it is possible, to introduce a mechanism of rolling blackouts. And commercial consumers will have to put up with a shortage of raw materials and prohibitively high prices.

“A target of $4,000 per 1,000 cubic meters no longer looks unrealistic, especially given the high demand and very modest supply,” says Nikolay Vavilov, a specialist in the strategic research department at Total Research. — And it is far from certain that Nord Stream 1 will be launched at all after maintenance. Another “damage” could be found in the turbine, which will jeopardize the safety of workers and the pumping process itself.”

So, in terms of both trolling and artificial escalation of tension, Gazprom is now definitely ahead of the rest: it seems that no one has laughed so openly and frankly in the face of Europeans for a long time.

Every day the risk of a major energy crisis on the continent becomes more and more real. This, according to Vavilov, is actively promoted by the current abnormal heat: electricity is spent on air conditioners and air circulation. But, in addition to the threat of a shortage of gas, there is also the issue of food, since both the sowing area (without Russian fertilizers) and the crop, which was partially lost due to drought, have suffered.

Temporary interruptions in gas supplies via Nord Stream 1 can be compensated with the help of alternative transit corridors through Ukraine and Poland, said the operator of the gas transmission system of Ukraine (OGTSU). As a replacement for Nord Stream, the operator proposes to pump gas through the gas measuring station (GIS) Sudzha, as well as through the Yamal-Europe pipeline.

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