Russia resumes partial gas flows to Europe through Nord Stream 1

Russia resumed gas supplies through a critical pipeline to Europe but German officials warned of further potential interruptions, accusing Moscow of using its energy exports to “blackmail” Europe.

Nord Stream 1, which runs under the Baltic Sea between Russia and Germany, had been shut down for repairs for 10 days, and many in Berlin and Brussels had feared it would not come back online after the outage.

But Robert Habeck, economy minister, said it was too early to be confident about Europe’s energy security. “Russia as an energy supplier has become unreliable,” he said on Thursday. “It is using its great power . . . to blackmail Europe and Germany.”

The uncertainty over gas supplies through NS1 had come to symbolise the breakdown in relations between Russia and the west in the aftermath of Moscow’s invasion of Ukraine, which prompted the EU, US and UK to impose swingeing sanctions on President Vladimir Putin’s regime.

Even before NS1 was closed for maintenance, Russia reduced the flow of gas through the pipeline by 60 per cent, citing technical issues. Germany at the time accused it of “weaponising” its energy exports to Europe and attempting to sow panic in the markets and drive up prices.

Though governments in Europe will be relieved that the flow of gas has resumed, Habeck said the pipeline was still only operating at 40 per cent capacity — roughly the levels before the maintenance work began.

“Just because 40 per cent of flows have now resumed, we should not lull ourselves into a false sense of security that [supply] will be stable from now on,” said Habeck. “On the contrary, we should expect . . . them to find some reason to . . . interrupt or reduce the flow of gas again in the future.”

James Waddell, an analyst at Energy Aspects, said by resuming partial flows Putin would retain a degree of influence over Europe this winter and ahead of any potential settlement of the conflict in Ukraine.

“Russia’s key objective is clearly to stymie Europe’s ability to comfortably fill gas storage ahead of the winter,” he said. “By restoring partial flows they retain some political leverage over Europe’s capitals while also maximising revenues that help fund the war in Ukraine.”

European benchmark gas futures fell around 8 per cent on the news that flows through Nord Stream 1 had resumed, with prices at the Dutch TTF hub declining to €149 per megawatt hour. But they later recovered to trade down only 2.5 per cent on the previous day at €157.50 per MWh, reflecting the uncertainty in the market.

Thomas Rodgers, a gas market analyst at ICIS, said the market had been broadly expecting the resumption of flows through NS1 to pre-maintenance levels but some traders had been covering themselves for a worst-case scenario of no gas.

“It’s good news for the market having this extra gas in terms of being able to fill up storage ahead of winter,” he added. “It means not having to destroy more industrial demand with high prices.”

State-backed Austrian energy group OMV said Gazprom had confirmed roughly half of its gas order would be filled on Thursday, in line with the volume it was receiving before maintenance started on the route.

Italy’s ENI said it was receiving flows from Gazprom at about half the requested rate, up from less than a third previously.

Russia had cited technical reasons for reducing the flow of gas through NS1 in mid-June, a move that prompted Germany to activate the second stage of its gas emergency plan and take a big step closer to the rationing of gas.

Russia blamed the reduction in supply on delays in the return of a Siemens Energy turbine used to pump gas through the pipeline. The turbine had undergone routine maintenance in Canada and Ottawa refused to send it back to Russia, citing its sanctions against Moscow.

But Germany said Russia was using the turbine issue only as a pretext to cut supplies. Canada eventually exempted the turbine from its sanctions and gave permission for it to be sent to Germany.

Traders are turning their attention to a warning by Putin on Wednesday that another turbine was due for maintenance on July 26, which could reduce flows through NS1 to 30mn cubic metres per day.

Habeck said the turbine saga was a good example of how Russia was “politicising technical issues”, adding: “Sometimes you get the impression that Russia doesn’t even want to get [the turbine] back.”