News

Russia cuts gas deliveries to Europe via Nord Stream 1

Russia will slash gas supplies through its largest pipeline to Germany to just a fifth of capacity from Wednesday in a move that threatens to leave the continent short of critical supplies ahead of the winter.

Russia’s state-owned Gazprom said on Monday it would cut existing flows on the Nord Stream 1 pipeline in half to just 20 per cent of capacity, having already lowered them to 40 per cent last month. European politicians have decried Russia’s “weaponisation” of gas supplies.

Gazprom has blamed the availability of turbines for the cuts but a spokeswoman for Germany’s economy ministry said there was “no technical reason for a reduction in supplies”.

European capitals will interpret Gazprom’s move as Russia showing its willingness to use gas in retaliation for sanctions linked to its invasion of Ukraine.

Europe is already struggling to fill gas storage facilities, leading to warnings of rationing for industry and concerns about shortages for domestic users.

Gazprom claimed that volumes would have to be cut further because of maintenance on a turbine used to pump gas through the pipeline, but gas industry analysts said this would not cause a steep drop in flows.

Laurent Ruseckas, an analyst at S&P Global Commodity Insights, said Gazprom’s move “fits with the pattern that has been on display for months and months which is continuing reductions of pipeline flows to keep supplies tight and complicate storage”.

European gas prices shot higher after Gazprom signalled that the volume of gas flowing to the continent would be cut. They rose 10 per cent on Monday to trade at €177 per megawatt hour — five times higher than the price a year ago.

Gas flows will drop to 33mn cubic metres of gas a day from 4am GMT on Wednesday, the company said, down from a full capacity of more than 160mn cubic metres and half of current flows. Gazprom resumed partial gas supplies through NS1 last week after an outage for repairs.

The state-run gas monopoly said it was cutting the flow because it was halting a turbine for maintenance, following through on a threat made by Russian president Vladimir Putin last week in Tehran to slash volumes.

The additional drop in Russian gas flows comes as European energy users grapple with a cost of living crisis and as industry battles to keep running, largely due to soaring gas prices.

There have been concerns in Europe that Russia will completely halt exports of gas, leading the European Commission to tell EU member states to cut their consumption by 15 per cent over the winter.

Moscow had blamed last month’s outage on the need to fix a turbine that had been sent to Canada for repairs. Canada this month waived its sanctions on supplying Gazprom with equipment to allow Siemens Energy, the company repairing the turbine, to return it.

Berlin and gas market analysts say Russia used the turbine issue as a pretext for cutting flows.

Gazprom blamed Siemens Energy, the turbine provider, for the problems. It said the company still had “open questions” about British and EU sanctions.

Additional reporting by Joe Miller in Frankfurt