Speculation Swirls Over Nord Stream Damage

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Intense speculation has been swirling about responsibility for this week's apparent attacks on the Nord Stream gas pipelines — built to carry Russian gas to Europe — with both sides trading accusations.

Many in Europe blamed Russia, portraying the attacks as an attempt to destabilize the region or send a warning about the vulnerability of alternative European infrastructure.

Discovery of the leaks coincided with a ceremony on Tuesday to inaugurate the new Baltic Pipe that will carry Norwegian gas to Poland, and came just ahead of a new package of EU sanctions against Russia.

If so, this could form part of a dangerous new phase of escalation in the Ukraine conflict, as Moscow raises the stakes through mobilization, annexation and "hybrid" warfare.

However, Moscow and some others pointed the finger at the US.

Trading Blame

Ukrainian presidential adviser Mikhailo Podolyak described the incident as "a terrorist attack planned by Russia and an act of aggression towards EU," claiming that "Russia wants to destabilize [the] economic situation in Europe and cause pre-winter panic."

European gas prices rose this week, but mainly because of Russian gas giant Gazprom's threats to stop transit flows via Ukraine rather than because of the damage to the idle pipelines in the Baltic Sea.

Still, the incident fuels uncertainty in the gas market and injects more bullishness and volatility — just as European gas prices were starting to retreat in response to healthy storage levels, demand destruction and high LNG imports.

Analysts said the attacks could also serve as a general warning to Europe that Moscow can target critical energy infrastructure, as Europe develops alternative sources of supply.

Some suggested that the US might have been responsible, with former Polish Foreign Minister Radek Sikorski cryptically tweeting "Thank you, USA."

Former US President Donald Trump described Sikorski's comment as "a really big deal."

Poland has long been one of Russia's strongest opponents in Europe. It opposed the Nord Stream 2 project — as did the US — and took action sooner than other European countries to diversify its gas imports.

Other observers suggested that Ukraine might be interested in dealing a permanent blow against Moscow and Russian gas, although this would carry a very high risk of alienating the EU.

Kremlin spokesman Dmitry Peskov hinted on Wednesday that the US would benefit from the damaged Nord Stream pipelines, implying that US LNG suppliers would prefer to avoid competition from the resumption of Russian pipeline gas volumes.

"We see huge profits of American suppliers of LNG, which have increased their supplies to the European continent by multiple times," he said. "They are very interested in getting such profits looking forward."

Both Sikorski and Peskov also alluded to comments by US President Joe Biden in February that if Russia invaded Ukraine "there will be no longer a Nord Stream 2. We will bring an end to it."

Russia's Federal Security Service (FSB) said last week that it had prevented a planned Ukrainian sabotage attack, which allegedly targeted infrastructure connected with the Turk Stream pipeline that carries Russian gas to Turkey and Europe.

Ukraine denied this and the incident has been interpreted in different ways — as evidence of a Western campaign against Russian infrastructure, or as a preemptive move by Moscow to deflect blame for any later incidents.

Western Response

Nato Secretary-General Jens Stoltenberg was cautious in his comments, saying that the organization was following reports "with great concern" but that "this is something that is extremely important to get all the facts on the table."

Denmark's defense minister said after a meeting with Stoltenberg that there were grounds to be concerned about the security situation in the region.

"Russia has a significant military presence in the Baltic Sea region and we expect them to continue their saber-rattling," Morten Bodskov said in a statement.

The EU's foreign policy chief, Josep Borrell, said that "all available information" pointed to "a deliberate act," and vowed that, "any deliberate disruption of European energy infrastructure ... will be met with a robust and united response."

While Russia might conceivably have sought to further destabilize Europe's economy and keep gas prices high in the longer term, some note that it could have simply kept the two Nord Stream pipelines idle to achieve that objective.

Another possible Russian motive may have been to justify the escalation of the war in Ukraine — by reinforcing the notion that Russia is under attack.

That message may become more important for the domestic audience in Russia if Moscow annexes occupied territories in Ukraine, as is widely expected.

There has also been some speculation that Gazprom might be seeking to declare force majeure and avoid paying fines for failing to meet contractual obligations under gas supply contracts in Europe. However, Moscow has already said that it would not recognize Western arbitration of any such claims.

Analysts note that Europe has been doing whatever it can to wean itself off Russian gas. Moscow halted flows through the original Nord Stream pipeline indefinitely at the end of August, and Nord Stream 2 appears unlikely ever to start delivering gas — so Russia would have little to lose from damaging the pipelines.

Conversely, some suggested that the incidents could serve more hawkish Western interests by effectively shutting down any voices in Europe that might want to restart Nord Stream flows or open up the Nord Stream 2 pipeline. This would deny Russia some of its leverage over energy markets.

Targeting Energy Infrastructure

The incident in the Baltic Sea bears some similarity to events in the Mideast Gulf in 2019, which saw a period of "hybrid" warfare that ramped up the geopolitical stakes during a period of tension between Iran and the West.

Then, too, energy infrastructure and trade, including oil tankers, were targeted — triggered in part by the reimposition of oil sanctions on Iran and the war in Yemen. There is broad consensus that Tehran or its proxies were behind the attacks.

Ominously, perhaps, initial tanker attacks in May 2019 were of a relatively minor nature, but were only the start of a steep escalation that saw more serious drone strikes against Saudi Arabia's Shaybah oil field and its strategic East-West Pipeline.

This all culminated in devastating attacks on the Abqaiq oil-gathering center and the Khurais oil field on Sep. 14, which temporarily knocked out much of the world's spare oil production capacity.

Some observers also noted the broader vulnerability of energy infrastructure to such attacks.

"In general, this [Nord Stream incident] just illustrates the great vulnerability of strategic infrastructure in many parts of the world," said one industry insider.

"Whether you're talking the North Sea or Gulf of Mexico, this is very hard to defend — and it is just part of the way we have organized our energy supply."

He noted that an attack would have required planning and organization to ensure it was "a strategic success" — but that, in the context of a war, it may be hard to know for sure who was responsible.

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

Gas Pipelines, Security Risk , Military Conflict, Gas Supply, Ukraine Crisis
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