According to the Permanent Representative of Russia to the EU Vladimir ChizhovProblems with the repair of turbines of the Nord Stream 1 gas pipeline (SP-1) in Canada could lead to a complete shutdown of the project and “a disaster for Germany”. Chizhov believes that Germany should learn how to repair gas pipeline components on its territory.
How justified is this approach – and will the German gas market be able to exist with a slump or worse stable in a situation where Russian gas supply is stopped via SP-1? Let’s try to understand.
Turbine after turbine…
Recall the essence of the problem of pumping gas through the SP-1 gas pipeline. On June 14, Gazprom announced in its official statement the unpleasant news: Nord Stream is planned to lose its current capacity for pumping gas in the near future.
Due to the untimely return of the gas pumping units from repair by Siemens (Germany), the end of the service life of the turbines and the detected technical malfunctions of the engines, only three gas pumping units can be used in the compressor station (CS) at the moment. Quadruple Portovaya unit. At the same time, Gazprom cannot voluntarily launch units that exhaust its resources – it received a direct restrictive order from Rostekhnadzor, temporarily banning its work.
As a result, gas supply through the Nord Stream gas pipeline is currently only possible in volumes up to 100 million cubic meters. meters per day with a planned volume of 167 million cubic meters. m per day
On June 15, Bloomberg confirmed that gas supplies from Russia to German energy company Uniper, the largest buyer of Russian gas in Germany, have already decreased by 25%. The drop in supply was linked to the failure of one of the SP-1 turbines to be returned to Germany from a repair shop in Canada, Bloomberg told Bloomberg. According to the agency, the contractor refused to return the unit to Siemens due to anti-Russian sanctions imposed by Canada. However, the German Minister of Economy Robert HabeckCommenting on the situation, he decided to declare that Gazprom is reducing the flow of gas through Nord Stream, allegedly only for “political” reasons.
Today’s comment by Vladimir Chizhov is, “When all these turbines go to Canada for repairs, [газопровод] it can stop. I think it will be a disaster for Germany” can be considered as a response to the statement of the German side.
What to expect when stopping SP-1?
The news of the gradual but hitherto unrelenting decommissioning of the SP-1 turbines seriously frightened Europeans. The gas market in the EU yesterday opened at $1,100 per 1,000 cubic meters. meters and at the end of the day confidently crossed the 1200 dollar mark, seriously targeting the 1300 dollar per thousand cubic meter area.
In fact, the pre-crisis supply level, which corresponds to 167 million cubic meters per day through SP-1 announced by Gazprom, indicates that Russia has loaded this route to the end and pumped 61 billion cubic meters from the gas pipeline. meters on an annual basis with a plate capacity of 55 billion cubic meters of SP-1. meters per year.
Assuming that SP-1 will be limited to about 100 million cubic meters per day by the end of the year, this would result in a loss of gas supply of about 13 billion cubic meters by December 2022. In addition, it will be extremely difficult for EU countries to somehow compensate for these supplies: the pumping of Russian gas through Ukraine is extremely limited today and has been completely stopped at the initiative of Russia along the Yamal-Europe gas pipeline route. Polish side. Therefore, using these alternative routes will be quite problematic.
Of course, there is the Nord Stream 2 (SP-2) gas pipeline, which is fully operational, but here the German government will have to literally “step down the throat of its song” and let the gas be pumped. This route, which is banned by Berlin for purely political reasons. Now fully resourced, the all-new SP-2 turbines can easily be used to pump gas into Germany – if there is political will “on the other hand” for it.
And finally, we can expect German efforts to intensify in finding alternative gas sources, with liquefied natural gas (LNG) being seen as the only means of supply.
The implementation of the transition path to LNG supply seems very difficult. To date, the main buyers of LNG are the countries of Southeast Asia. China, Japan, South Korea, India and a few other countries currently account for about three-quarters of the world’s LNG consumption. Therefore, it is expected that it will be extremely difficult for Germany and other European countries to buy something in such a market for Southeast Asian countries – the same 13 billion cubic meters by the end of the year, which is also significant in Europe. Germany’s consumption plans account for only one-tenth of China’s or Japan’s purchases of over 100 billion cubic meters of LNG per year per country.
Will Uncle Sam help?
Therefore, today Berlin has several ways to solve the current crisis with the SP-1. The simplest and most direct way is to somehow persuade Canada to complete the repair of turbines for Portovaya CS and return them to Russia. Equally fast, but already associated with the loss of the “political face” is the transfer of the required amount of gas to the idle SP-2, without solving the problem of repairing the turbines or delaying this decision.
And finally, the search for LNG from “allies”, especially the United States, which at the beginning of March threatened Europe with a literal “flood” of liquefied gas.
For nearly a decade, we’ve been hearing just such a scenario: some analysts have already gotten used to scaring everyone away with the fact that as soon as some additional volumes of LNG from the United States hit the market, the Americans allegedly started it. dumping forces Russian gas out of the European market.
But in reality, LNG produced in the United States has, for some reason, gone over the last decade exactly where it’s paid more for and can be guaranteed to be sold in any quantity – the aforementioned fast-growing markets of Southeast Asia. And for some reason, none of the US businessmen want to deal with 10-15 billion cubic meters of European goods. This wonderful discovery may blow your mind, so be prepared to accept it.
In early 2022, for the first time, Europe posted consistently higher stock prices than Asia. Everything turned out to be extremely simple: there is no “Euro-Atlantic solidarity”, but there is the purest and profitable power that everyone is familiar with. In addition to the high price, Europeans have nothing to attract LNG suppliers.
So the sharp drop in pumping through the SP-1, which has caused prices to soar to almost $1,300 per thousand cubic meters, is hurting Germany and other Europeans, but hardly affecting Russia. The European market has regained its attractiveness, but US export opportunities have declined as expected – all “excess” American LNG is available for repurchase in Southeast Asia, where its consumption has been steadily increasing.
Thus, the path based on “overseas partners” leads Germany to a strategic stalemate.