The Big Picture

Ukraine War Goes Hybrid

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  • The all-out energy war between Russia and the West appears to have escalated, after blasts on the two Nord Stream pipelines built to carry Russian gas to Europe.

  • Circumstances are murky, with both sides pointing fingers at the other. But the apparent attacks have fueled concerns in Europe about its energy security.

  • The events also threaten the start of wider “hybrid” warfare in Europe, spreading beyond conventional fighting in Ukraine to vulnerable targets.

It’s not yet known who or what is responsible for this week’s blasts on the Nord Stream and Nord Stream 2 pipes, where four leaks had been detected as of Thursday. Adding to the sense of the confusion over motivations for possible sabotage, no gas was being delivered through either pipe. But the apparent attacks have plunged Europe — and its energy sector — into a heightened state of alert. Energy Intelligence noted earlier this year that keeping the EU and the gas market off-balance through tactical disruptions might best suit Russia's political and revenue aims. The damaged gas pipelines now point to the possibility of Moscow escalating the conflict through unconventional tactics, on top of its recent nuclear threats, mobilization of more troops, and expected annexation of four partially occupied Ukrainian provinces.

Blame Game

Many in the West suspect a Russian role. Moscow certainly has form on disrupting energy flows: It has engaged in a steady pattern of squeezing gas supply to Europe, most notably whenever the West upped its sanctions pressure. This week saw the EU announce plans for its eighth package of financial sanctions against Russia, including the "legal basis" for the EU to enact a price cap on Russian oil. In oil markets, Moscow’s hand was seen in the recent closures of the Caspian Pipeline Consortium terminal on its Black Sea coast, through which Kazakhstan exports most of its crude.

Moscow, for its part, strongly hinted at US involvement, with Kremlin spokesman Dmitry Peskov on Wednesday noting that US LNG suppliers would benefit most. Some noted that the incidents make Germany less dependent on Russia's energy blackmail, or that the US has long opposed the Nord Stream 2 pipeline, arguing that it didn’t serve Europe’s energy security interests. Some have also pointed to Ukraine or Poland. Moscow on Thursday rejected speculation it was responsible for the Nord Stream incidents, saying also that they took place in areas controlled by US intelligence — taken to mean as within Nato-dominated territory.

Both sets of claims raise questions: Why would Russia blow up its own pipelines, rather than simply keep supply turned off? And why would the US take action to prevent any European backslide, when such a scenario looks unlikely right now? Gas prices were falling; European storage-filling had largely hit its targets; and EU momentum behind price caps on Russian oil and gas — and additional Russia sanctions — was growing.

European Energy Alert

Regardless of the answer, the Nord Stream blasts have put European energy infrastructure, and potentially other infrastructure, on notice. The gas leaks were discovered the same day the new Baltic gas pipeline linking Norway to Poland was inaugurated. Nato said Thursday that the damage appeared to be a result of sabotage, and that it was committed to “deter and defend against the coercive use of energy and other hybrid tactics by state and non-state actors.” It also echoed the EU’s earlier warning of a robust response to any attacks on or disruption of critical infrastructure.

Norway, Europe’s biggest gas producer, has said its military will be “more visible at Norwegian oil and gas installations" and noted warnings from operator companies of “unidentified drones/aircraft close to offshore installations.” Danish state news channel DR said TotalEnergies reported observations of “unauthorized drone activity” at the Halfdan B oil and gas field and had taken steps in accordance with security procedures. Offshore Energies UK said Thursday it is engaging on security with UK government authorities and other stakeholders after the drone sightings and Nord Stream events.

Unconventional Warfare

If Russia were responsible, and carried out the operation largely as a warning sign, it would raise the ominous threat for Europe of hybrid warfare — the use of “gray zone” tactics that combine military and nonmilitary means beyond the boundaries of conventional conflict.

From this perspective, the pipeline attacks would be designed to have an overall destabilizing effect on Europe as it prepares to levy more sanctions against Moscow, highlighting the vulnerability of its energy infrastructure. The attacks would also ratchet up pressure for Europe to back off from the conflict, emphasizing that it will feel as much pain as Russia if current support for Ukraine continues. The climate fallout of the attacks — given the vast amount of methane released on Europe’s shores as the pipes empty — would reinforce that message.

The attacks would also help justify Russia’s latest moves in Ukraine, particularly at home, by reinforcing the notion that Russia is under attack. Russia's Federal Security Service last week said it had prevented a Ukrainian sabotage attack allegedly targeting infrastructure connected to the Turk Stream pipeline, which Ukraine denied.

Lastly, Gazprom might also avoid paying fines after European firms rejected its declaration of force majeure on past and current supply shortfalls — although Moscow has already said it would not recognize Western arbitration of any such claims.

What Next?

The blasts themselves had limited impact on gas prices, since no gas was being delivered through the pipes: Germany pulled the plug on Nord Stream 2 just ahead of Russia’s Feb. 24 invasion of Ukraine, and Russia indefinitely halted flows through Nord Stream in late August. But spot prices started to increase on Russian gas giant Gazprom's threats to stop transit flows via Ukraine, which now ships around 42 million cubic meters per day of Russian gas to Europe, over an arbitration claim filed recently by Ukraine’s Naftogaz.

The more novel and deeper impact, however, is the sense of uncertainty and escalation. European — and Russian — energy and other infrastructure is now seen as at risk. Cyber attacks, already an industry focus, potentially become an even bigger threat. The cycle of escalation in the Mideast Gulf in 2019 — when mine, drone and missile incidents spiralled at a time of tension between Iran and the West, culminating in the knocking out of half of Saudi oil production capacity — showed how quickly the stakes can rise.

And if Russia were responsible, predicting Moscow’s next move now looks much more challenging. Looking ahead, some potential triggers for escalation are obvious — the EU ban on Russian crude is set to take effect from Dec. 5, accompanied by the G7-backed price cap — but others are unknown. Oil and gas markets were already facing a period of extreme uncertainty and volatility this winter. That prospect just got even worse.

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

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