Gazprom, Russia’s state-owned methane giant, announced yesterday its intention to cut by 40% the volumes of gas going to the EU via the Russia-Germany pipeline, Nord Stream 1. A decision motivated by sanctions in Moscow. Which, according to the hydrocarbon giant, would have slowed down the repair and return of some components of the Baltic Portovaya compressor. Delivered to Siemens in Germany for repair but blocked at HQ in Montreal. Therefore, Gazprom explained, “only three compressions can currently be used at Portovaya station. And what they can do is pump 100 million cubic meters of gas instead of the planned 167.
A political maneuver
Although Siemens has confirmed the circumstances, the maneuver is taking on political rather than logistical contours. That said, it appears to be in retaliation for the sanctions imposed by the West. That the Kremlin can afford the luxury of implementation thanks to the tax revenues from gas and oil collected between January and April 2022, which thanks to the increase in prices have increased by 90% compared to the same period of 2021. We are talking about an increase of 27 billion euros. Even if a total embargo of all countries in the world on Russian energy were to begin next January, the additional revenue would be enough for Moscow to fund almost all of its military spending of around 100 billion euros for 2023 at this rate.
Developments are expected on Vladimir Putin’s intentions in the speech the Russian leader is to deliver next weekend at the St. Petersburg Economic Forum. Which is expected to focus on Western sanctions. Meanwhile, the markets felt Gazprom’s maneuvers immediately. In Amsterdam, gas prices rose by 17% to 97 euros per megawatt hour. While Arera announced in Rome that Italy’s shares are now up 52%.
The “race against time” in Berlin
Member states are starting to prepare for any eventuality: Germany’s economy ministry has said security of supply is “currently guaranteed” and Berlin has urgently passed legislation requiring the country’s tanks to be 90% full by November. At the moment the goal seems far away. With a capacity of 4 billion m3, the Rehden basin, the largest in Europe, is currently only 7.95% full.
Germany would therefore be in a “race against time” to build up enough stocks before winter. Race that would take place notably in the Bavarian countryside 1,600 meters underground. There is the former Bierwang natural gas field, which serves as a storage facility for the German energy company Uniper. It can store up to 800 million cubic meters of gas: enough to supply the city of Munich for eight months.
The EU focuses on Israel
This is not the first time that Russia has used gas as a weapon against opponents. Consider the faucet closures imposed by the Moscow monopolist on Poland, Bulgaria, Finland, the Netherlands and Denmark after importers refused to open the ruble account to pay for supplies due between April and May. A real “retaliation” for Western support for Ukraine, according to European Commission President Ursula von der Leyen on the second day of her visit to Israel.
Von der Leyen’s journey is no coincidence. In fact, the EU has declared its intention to strengthen energy cooperation with the country in order to reduce dependence on Russia thanks to the immediate delivery of liquefied natural gas via Egypt. And the blueprints for the EastMed Eastern Mediterranean gas pipeline. Israel’s Energy Ministry announced that Israel and the European Union will sign an agreement today to export natural gas to the EU.