Russia keeps pipeline shut as Gazprom, Siemens Energy wrangle

(Reuters) -Russia stored one in every of its foremost gasoline provide routes to Europe shut on Saturday, stoking fears of winter gasoline shortages and spotlighting variations between Gazprom and Germany’s Siemens Power over restore work on the pipeline.

Already struggling to tame hovering gasoline costs, European governments had anticipated the Nord Stream 1 pipeline to renew flows after a brief upkeep this week however Russia abruptly cancelled the restart, citing an oil leak in a turbine.

Europe has accused Russia of weaponising power provides in what Moscow has referred to as an “financial struggle” with the West over the fallout from Russia’s invasion of Ukraine. Moscow blames Western sanctions and technical points for provide disruptions.

The newest Nord Stream shutdown, which Russia says will final for so long as it takes to hold out repairs, added to fears of winter gasoline shortages that would assist tip main economies into recession and power rationing.

The invention of the oil leak on Friday coincided with the Group of Seven (G7) rich democracies continuing with plans to impose a value hole on Russian oil, aspiring to shrink President Vladimir Putin’s sources to combat the struggle in Ukraine.

Gasoline shortages additionally prompted European Union member Sweden on Saturday to unveil a monetary assist package deal for power corporations.

“If we don’t act, there’s a severe danger of disruptions within the monetary system, which within the worst case might result in a monetary disaster,” mentioned Prime Minister Magdalena Andersson.

“Putin needs to create division, however our message is evident: you’ll not succeed,” she mentioned.

GAS PRICE RALLY EXPECTED

Gazprom mentioned Siemens Power was prepared to hold out repairs on the pipeline however that there was nowhere out there to hold out the work, a suggestion Siemens Power denied, saying it had not been requested to do the job.

Siemens Power has additionally mentioned that sanctions don’t prohibit upkeep.

Earlier than the most recent spherical of upkeep, Gazprom had already reduce flows to simply 20% of the pipeline’s capability.

“Siemens is participating in restore work in accordance with the present contract, is detecting malfunctions … and is able to repair the oil leaks. Solely there may be nowhere to do the restore,” Gazprom mentioned in a press release on its Telegram channel on Saturday.

Siemens Power mentioned it had not been commissioned to hold out the work however was out there, including that the Gazprom-reported leak wouldn’t often have an effect on the operation of a turbine and could possibly be sealed on website.

“Regardless of this, now we have already identified a number of occasions that there are sufficient further generators out there within the Portovaya compressor station for Nord Stream 1 to function,” a spokesperson for the corporate mentioned.

Flows by way of Nord Stream 1 had been resulting from resume early on Saturday morning. However hours earlier than it was set to begin pumping gasoline, Gazprom printed a photograph on Friday of what it mentioned was an oil leak on a bit of kit.

Siemens Power, which provides and maintains gear at Nord Stream 1’s Portovaya compressor station mentioned on Friday the leak didn’t represent a technical cause to cease gasoline flows.

“International pure gasoline costs will seemingly rally onerous on Monday as markets readjust to this newest #Gazprom growth,” Tom Marzec-Manser, Head of Gasoline Analytics at ICIS, mentioned on twitter.

“The closure of #NordStream1 reduces total Russian pipeline flows but additional and can make balancing provide & demand this winter all of the harder.”

Requested in regards to the halt on Saturday, Financial Commissioner Paolo Gentiloni mentioned that the European Union expects Russia to respect its agreed power contracts however is ready to fulfill the problem if Moscow fails to take action.

The German community regulator mentioned that the nation’s gasoline provide was at present assured however the scenario was fragile and additional deterioration couldn’t be dominated out.

“The defects alleged by the Russian aspect will not be a technical cause for the halt of operations,” it mentioned.

Wholesale gasoline costs have rocketed greater than 400% since August 2021, squeezing households already gripped by a cost-of-living disaster and forcing some power hungry industries, reminiscent of fertiliser and aluminium makers, to reduce manufacturing.

The European Fee has mentioned a full cut-off of Russian gasoline provides to Europe, if mixed with a chilly winter, might cut back common EU gross home product by as much as 1.5% if nations didn’t put together upfront.

(Reporting by Riham Alkousaa, Nina Chestney, Supantha Mukherjee and Johan Ahlander; writing by Matthias Williams Modifying by Jason Neely, Emelia Sithole-Matarise and Louise Heavens)