Europe feared that state-owned Gazprom Nord Stream 1, which had been undergoing major maintenance for ten days, would not reopen from the end of maintenance on Thursday morning at 06:00. The Kremlin has repeatedly pointed to alleged technical problems in recent days, as Europe gasps to fill its storage rooms for the winter.
ILLUSTRATION TELEGRAPH
During a summit in Tehran this week, President Putin cited the lack of a Siemens gas turbine at the Russian switch point Portovaya as a reason for possible delays and cancellations. That turbine, one of six for Nord Stream 1 at this border point, was in Canada for maintenance. Due to European and Canadian sanctions, it would not return to Russia in time to be able to supply the gas via the Baltic Sea.
According to network companies, it always takes several hours before the gas supply is at full capacity. The first data Thursday shows that deliveries are made at 30% of normal capacity.
‘Force of the majority’
However, on Wednesday afternoon, Gazprom placed a first order for the network, a standard procedure. This is 29.3 gigawatt hours of gas. That should run through the pipeline from east to west today. But such orders were previously canceled on grounds of force majeure. The normal capacity is 73 gigawatt hours. Last month, Gazprom reduced its exports to the West to 40% of its normal production, the level it was just before the maintenance of Nord Stream 1.
On Thursday, the European Commission presented an emergency plan for the energy crisis. Countries will eventually be obliged to reduce their gas consumption by 15% until the end of winter, if the member states agree to this proposal. Spain immediately objected. Europe last year relied on supplies from Western Siberia for 40% of all its gas. The EU wants to be completely independent of this gas after the Russian invasion of Ukraine in 2027.
Under the threat of less gas in Europe, the price of futures contracts, the basis of costs for energy bills of consumers and businesses, has skyrocketed in recent months. ING commodity strategist Warren Patterson says little that that Thursday morning fell almost 7%. He already priced in a decline. “There is still a lot of uncertainty about how much gas will come out of the pipeline in the coming weeks and months,” Patterson told Bloomberg. Buyers will therefore demand a hefty risk premium.