Nord Stream sank quietly – Newspaper Kommersant No. 179 (7380) of 09/28/2022

Nord Stream sank quietly - Newspaper Kommersant No. 179 (7380) of 09/28/2022

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For the first time since the conflict in Ukraine, the strategic cross-border infrastructure — the Nord Stream and Nord Stream 2 offshore gas pipelines with a total capacity of 110 billion cubic meters — has been seriously damaged. Although both pipelines were not in use at the time of the accident, they contained hundreds of millions of cubic meters of process gas. Both European countries and Russia consider sabotage to be the likely cause, but so far no one has claimed responsibility for the attack, which required advanced technical means. Inspection of gas pipelines could take weeks, and restoration – months or even years, which excludes the possibility of their use for supplies to Europe this winter. However, while Europe does not show much concern.

Gas leaks on the Nord Stream 2 gas pipelines, which created giant 100-meter gas bubbles on the surface of the Baltic Sea, may be the result of sabotage, a number of European officials admit. In this case, we are talking about a violation of the status quo on the inviolability of cross-border energy infrastructure, moreover, located in the very center of Europe. Responsibility for the attack, which would have required technologically sophisticated submersibles, has yet to be claimed.

Danish Energy Agency on the afternoon of 26 September reported about three gas leaks in the Nord Stream pipeline system. They were recorded in the Danish economic zone southwest of the island of Bornholm and in the Swedish economic zone to the northeast of it. The Danish military released a video showing gas escaping to the surface of the Baltic Sea, creating disturbances about 1 km in diameter. Seismologists in Sweden and Denmark have recorded explosions in areas of gas leaks on Russian gas pipelines. Swedish police launched an investigation on suspicion of sabotage.

Both Russian and European officials, in their statements on 27 September converged that the most logical explanation for the accident is sabotage. This, in particular, was mentioned by the press secretary of the President of the Russian Federation Dmitry Peskov, Prime Minister of Denmark Mette Frederiksen and Prime Minister of Poland Mateusz Morawiecki. The latter added that what happened “probably means another escalation of the situation taking place in Ukraine,” without specifying who exactly, in his opinion, attacked the gas pipeline.

“The first reports indicate that this may be the result of an attack or sabotage,” US Secretary of State Anthony Blinken commented on the incident. “If this is confirmed, then this is clearly not in anyone’s interests.”

The construction of the Nord Stream pipeline system, designed to transport up to 110 billion cubic meters of gas from Russia to Europe per year, cost Gazprom and European partners as a whole about €17 billion.

Nord Stream and Nord Stream 2 were at the epicenter of the energy war between Russia and Europe. In response to the EU sanctions imposed for the outbreak of hostilities in Ukraine and the freezing of the certification of Nord Stream 2, Moscow reduced gas supplies to Europe to a historical minimum, stopping them first along the Yamal-Europe route, and then along the Nord Stream .

Now supplies to Europe go only through Ukraine (about 42 million cubic meters per day), as well as through the Turkish Stream. A representative of the European Commission said on September 27 that the accidents at Nord Stream “have no consequences for gas supply in Europe.” This is indirectly confirmed by the dynamics of gas prices: the November futures on the Dutch TTF hub grew very moderately during the day and skyrocketed only after Gazprom announced a possible halt in supplies through Ukraine (see reference), rising by 19.7% to € 207 for 1 MWh.

Gazprom may stop gas supplies through Ukraine

Arbitration proceedings initiated by Naftogaz Ukrainy against Gazprom could lead to the Ukrainian company falling under Russian sanctions, which would automatically lead to a ban on fulfilling any obligations to it, Gazprom said on September 27. Such a scenario means a complete halt in transit through Ukraine.

Before the outbreak of hostilities on the territory of Ukraine, the transit of Russian pipeline gas through the territory of the country to Europe went through the Sohranivka and Sudzha points. At that time, Sokhranivka accounted for up to a third of deliveries (about 32.6 million cubic meters per day). However, since May 11, the Ukrainian GTS operator has refused to accept Russian gas at this entry point, arguing that it was force majeure. The operator explained his decision by the fact that he could no longer carry out operational and technological control of the Novopskov compressor station, which is located in Russian-controlled territories. In response, Gazprom stopped paying for these transit capacities, as it believes it has lost access to them. However, the Ukrainian side believes that Gazprom still has to pay for them. In early September, Naftogaz filed a petition for arbitration.

Now Russian gas transits only through the Sudzha point in the amount of about 42 million cubic meters per day.

“Gazprom categorically rejects all the demands of Naftogaz Ukrainy on the initiated proceedings regarding the transit of Russian gas to Europe – services not provided by the Ukrainian side should not and will not be paid,” Gazprom said. The Russian company notified the secretariat of the International Arbitration Court of the International Chamber of Commerce and the current head of NJSC Naftogaz of Ukraine about this.

According to Gazprom, Naftogaz Ukrainy is well aware that under the agreement dated December 30, 2019, default on its part means no payment even in the event of a force majeure claim. Gazprom also recalled that Zurich, Switzerland, was chosen to resolve disputes between the parties, but since Switzerland has moved into the category of “unfriendly countries”, this deprives Gazprom of “the fundamental right to a fair and impartial hearing both in the arbitration itself and in the state courts at the place of its holding.

Tatyana Dyatel

The failure of the Nord Stream system completely excludes the possibility of any additional supplies to Europe via these highways in the coming winter. The release of gas may continue until about the end of the week, then Gazprom will need to select a vessel to inspect pipelines and obtain permission for this work from the authorities of Denmark and Sweden. Only the survey will take weeks, and the repair itself – months. In Gazprom, Kommersant did not specify whether the company plans to invite international experts to inspect pipes.

The cost of eliminating the consequences of accidents can be up to €200-300 million, but a lot will depend on how soon Gazprom can start this work and whether Denmark and Sweden agree on it, says Sergey Kondratiev from the IEF. To fill each branch of the gas pipeline, 177 million cubic meters of process gas are needed, its total losses can be up to 20–30% (gas will escape until the pressure is balanced by the pressure of the water column at the breakthrough site).

irrelevant question

In Germany, the reaction to the pipeline incidents has been rather restrained. All the leading media reported about the incident, but it was clearly not the main topic of the day. German political scientist Hanna Notte explained to Kommersant: “Firstly, the environmental authorities said that there are no reasons for serious concern in terms of the impact of incidents on the environment. Secondly, for several weeks now Nord Stream 1 has been no gas flow, and Nord Stream 2 did not work, and in Germany it was widely believed that these pipelines were no longer relevant. And thirdly, now the media is focusing on the so-called referendums in Ukraine, the mobilization announced in Russia and the upcoming speech of Vladimir Putin.” According to the expert, there are so many components in the conflict around Ukraine that “the story of Potoki has become just one of them.” “If something like this had happened to them before the war, the reaction in Germany would have been completely different,” says Hanna Notte.

German officials also commented on the leaks with restraint, while a number of media outlets, citing informed sources, reported that the government had already established for sure that it was a sabotage. On the question of who is behind it, opinions differed. The RND publication, after interviewing experts, clarified that these could not be amateur divers or militant environmentalists – the depth was too great, there were no earthquakes during this period (according to the German Center for Geological Research), which means that the state staged a sabotage.

“Theoretically, Ukraine could be interested in this, but now it has other problems, in addition, it was generally believed that gas would still not flow through these pipelines until the end of the war,” the publication says. “Russia is also under suspicion, even though it I would thus deprive myself of room for maneuver, which would not be very logical.

Nevertheless, as follows from this and other articles in the German media, in Germany they admit that Russia nevertheless arranged the sabotage: either to blame Ukraine for its organization, or to further destabilize the European energy market and increase gas prices.

The fact that Russia itself could undermine the pipelines was also discussed in the Bundestag. The head of the defense committee, Marie-Agnes Strack-Zimmerman (representing the Party of Free Democrats, which is part of the ruling coalition), admitted that European markets were the target of sabotage and called for an alternative to hydrocarbon supplies from Russia as soon as possible. Christian Democrat MP Roderich Kiesewetter also said on Tuesday that the attack on critical infrastructure could have been part of a hybrid war by Russia.

Secretary of State for Economic Affairs Patrick Greichen told Der Spiegel that Russia “already used gas as a weapon of war” in the conflict over Ukraine, adding that “anything can be expected from the regime of Vladimir Putin.” That we can talk about a “Russian provocation,” said Deputy Foreign Minister of Poland Marcin Przydacz. The fact that Ukraine or one of the Western countries supporting it could be behind the sabotage was not mentioned aloud by European officials.

Tatyana Dyatel, Elena Chernenko

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