Europe: Long cold winter part 2 – Nord Stream

Nord Stream maintenance work and temporary gas interruption The routine maintenance closure of the Nord Stream gas pipeline, which started on Monday, has brought the Eurozone’s energy fragility to the agenda. The Nord Stream 1 gas pipeline was shut down for a maintenance period of 10 days. German officials and investors have expressed concerns that Moscow may not reopen Europe’s main gas pipeline. Considering Germany’s high dependence on Russian gas and lack of easy alternatives, a complete cessation of the flow will come as a major shock.

Nord Stream 11-21 July routine maintenance work

Possibilities of energy crisis Nord Stream AG will temporarily close both lines of the gas pipeline system for annual routine maintenance work from 11 July to 21 July 2022. It is a maintenance work that would not have even been taken into account if it were not for the current extraordinary situation normally associated with Russia. However, now, of course, there is a risk situation that is being read and it is worried that it is possible that the gas flows will either not open at all or not open as before after the 10-day period. Of course, this will be an issue that will make Europe vigilant about energy storage, as it may also be the prelude to a large-scale energy crisis that may occur in the winter.

EU’s Natural Gas Imports from Russia

It is analyzed that Gazprom may find reasons to prolong the process and this will be in Russia’s interest. Gazprom blames the delay in returning serviced equipment caused by Western sanctions, while Russia denies that the supply disruptions were intentional.

Weekly Russian Crude Oil Incoming to Ports… The main ports in the European Union are Rotterdam, Le Havre, Wilhelmshaven, Trieste and Gdansk. 

EU emergency action plan The EU action plan on the possibility of Russia cutting off gas consists of three phases: warning, alarm and emergency phase. Germany has already triggered the “alarm phase” of its emergency gas plan in response to the drop in Russian supplies. The second “alarm stage” of a three-stage contingency plan means officials consider the risk of long-term supply shortages high. The transition to Phase 2 was triggered when Gazprom cut off the flow of the Nord Stream 1 pipeline in the Baltic Sea to just 40% of its capacity last week. In the second phase, the market is still able to function without the need for government intervention, which will come into play in the final emergency phase.

Phase 1 involved a tighter monitoring of daily flows and a focus on filling gas storage facilities since the end of March, with Germany facing reduced deliveries from main supplier Russia. In Phase 3, some sectors will not have access to gas, while households will continue to be supplied with natural gas.

Funds allocated by governments to protect households and businesses from the energy crisis

Conclusion? The International Energy Agency (IEA) warned that Russia could cut off the gas to Europe completely in order to increase its political power and urged Europe to prepare now. Germany imported 22% less natural gas in the first four months of 2022, but the cost increased by 170% over the same period. Public demand for low-income consumers’ insolvency protection measures through subsidies will also rise.

While Europe is trying to stockpile more energy and try to urgently diversify its supply, Russia can use gas flows as a strategic element to force Europe. Currently, rising energy prices have brought Europe’s dependency to a striking point, as Germany has a current account deficit, which is a historical negative statistic.

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