Gas pumping through Nord Stream will not resume soon: what are the consequences

Expert Yushkov: “Gazprom is forced to switch to a price maximization strategy”

The three-day maintenance of Nord Stream 1, as expected, resulted in an indefinite shutdown. Maintenance work was supposed to be completed on September 3, but an “abnormal” situation arose: Rostekhnadzor revealed an oil leak at the last working turbine. Against the backdrop of growing alienation between Brussels and Moscow, in the West, such arguments from Gazprom are considered far-fetched. Be that as it may, the parties continue to raise the stakes in a double-edged, uncompromising game in the energy field.

It is important that for the first time in the statement of Gazprom, the expected date for the resumption of the work of Nord Stream 1 is not given. That is, the pumping of gas is completely stopped, and then – silence, uncertainty. Rostekhnadzor warned that the faults and damage found “do not allow for safe, trouble-free operation of the gas turbine engine.” In turn, Siemens Energy said that although it is not currently engaged in maintenance of the pipeline, it is ready to take part in technical work. But at the same time, she considered the conclusion of the Russian side a far-fetched pretext.

“As a manufacturer of turbines, we can only state that such a conclusion is not a technical reason for stopping operation. This is a routine procedure included in maintenance work. In the past, the occurrence of such leaks did not lead to a stop in production,” Siemens Energy noted.

Well, that’s in the past, after all. And today we have sanctions in the yard, the strategic refusal of the West from Russian energy carriers and much more. The geopolitical context, which directly affects the state of bilateral trade, has changed dramatically. And every day it undergoes an ever deeper reformatting. Take, for example, the words of the head of the European Commission, Ursula von der Leyen, on September 2, who announced that Brussels was ready to set an upper price limit for pipeline gas from the Russian Federation. This measure, according to the official, “should prevent attempts to manipulate the EU energy market by President Vladimir Putin.”

“In the situation with the shutdown of the Nord Stream, Gazprom refers to the order of Rostekhnadzor. They say that this is not his decision, but the regulator, who can only obey, – explains the expert of the Financial University under the Government of the Russian Federation Igor Yushkov. – Siemens Energy sees a different background. It is difficult to say how politicized this story is. I think if Moscow had maintained normal relations with Western countries, it would have calmly ignored the oil leak on gas turbine equipment. The malfunction that occurred could be eliminated somehow later, during the next major overhaul of the turbine.

But today’s global confrontation changes everything. Gazprom’s position is that both the return of the first turbine from Germany and the shipment of the remaining five 52-megawatt turbines to the plant in Montreal (they are located at the Portovaya compressor station) and their return to Russia are possible only if there are legal guarantees non-imposition of sanctions on equipment. And not only from the European Union, but from two more jurisdictions – the UK, where Siemens Energy is registered, and Canada, where turbines are being repaired. So far, we have not seen any synchronous documents from them, Yushkov recalls.

“In fact,” the MK interlocutor argues, “Gazprom adheres to the well-known tactics of the Italian strikers: if there is the slightest reason to declare a strike, it must be used, “Accordingly, any minor breakdown, any inaccuracy in the documentation is taken into service by the Russian side. It is clear that in the near future, until the issue with the status of the turbines is resolved, pumping will not resume. In general, the Russian company is changing its strategy. Previously, it tried to maintain its share of the EU market, but today it is pointless to do so. Since the Europeans are determined to give up Russian gas within two or three years, this means that they will break off long-term (10-15 years) contracts. In order to earn more, Gazprom is forced to switch to a price maximization strategy while its products are still in demand in the EU. In this situation, any technical and legal nuance plays a role.”

As for Ursula von der Leyen’s recent thesis regarding the price ceiling for Russian gas, it has no prospects, since it crosses out the very possibility of trading this raw material. As Yushkov explains, the pricing formula is fixed in the current contracts of Gazprom with the EU countries. In accordance with it, payment is made. If Brussels sets a limit price, say, at $100 per thousand cubic meters, and pays Gazprom according to this tariff, it will consider that the money has not been received under the terms of the contract. And the next batch of gas will not be sent to Europe.