Gazprom Squeezes Nord Stream Gas Flows Again

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Russian gas giant Gazprom said it will further reduce gas exports to Europe via the Nord Stream 1 pipeline to around 20% of capacity from Wednesday.

The move ratchets up pressure on Europe, which is scrambling to stockpile enough gas for the coming winter heating season.

Europe depends heavily on Russian gas and has accused Moscow of using its gas as a weapon in retaliation for European support to Ukraine, which has been under attack from Russian forces for the last five months.

Gazprom said on Monday that it would deliver 33 million cubic meters of gas per day from Wednesday — down from 68 MMcm/d or 40% of capacity over the last few days.

The state-controlled pipeline gas exporter said the reduction in capacity was caused by problems related to the maintenance of turbines at the Portovaya compressor station at Portovaya.

Gazprom has been citing problems with the turbines as the reason for reduced gas flows since mid-June, but German and European officials say this is untrue and that Moscow is deliberately restricting flows.

Turbine 'Ready to Ship'

Siemens Energy said on Monday it had supplied the necessary paperwork to send one turbine back to Russia from Germany and that Gazprom is responsible for obtaining the necessary customs documents.

Until early June, Nord Stream 1 had been shipping Russian gas to Germany at rates close to its full capacity of around 170 MMcm/d.

Volumes dipped to around 40% of capacity in mid-June when Gazprom started citing the turbine problems, then for 10 days until Jul. 21 volumes sank to zero as the pipeline underwent annual maintenance.

There was much relief when gas deliveries resumed at 40% of capacity last week, although President Vladimir Putin had referred to the possibility of a further dip in volumes as another turbine was taken off line for maintenance.

Last week's restart at 40% of capacity had allowed Germany — Europe's biggest gas consumer — to inject more gas into storage ahead of the winter, but the latest reduction in flows will disrupt that effort.

Storage Injections Disrupted

Two days after Nord Stream 1 came back on line last week, Germany's net storage injection returned to its pre-shutdown level of around 90 MMcm/d (see graph).

That is still relatively low, however, compared with early June storage injections, when the pipeline was still operating close to its full capacity.

Germany had to slow the pace of injections during the 10-day maintenance period and there were even two days of net withdrawals from storage.

Germany and other EU countries have been hoping to fill gas storage facilities to 80% of their capacity by Nov. 1 to avert a shortage during the cold winter months, when gas is used to heat homes and other buildings.

Because of the uncertainties around supplies of Russian gas, the EU has been discussing measures to reduce the bloc's gas demand by 15% for the six months from August through March.

Meanwhile, Germany had to provide a €15 billion ($15.3 billion) rescue package last week to utility Uniper — its largest importer of Russian gas — after it ran up heavy losses because of tight gas supplies and high prices.

Uniper has described the low supplies of Russian gas as a breach of contract, but Gazprom and the Kremlin have argued that Europe's gas crisis is attributable to its sanctions against Russia and poor energy policy decisions.

For more coverage of the Ukraine crisis, visit Ukraine Crisis: Energy Impact >

Gas Supply, Gas Inventories, Sanctions, Ukraine Crisis
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