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Russia’s Gazprom tightens squeeze on gas flow to Europe

MOSCOW (Reuters) -Russia tightened its gas squeeze on Europe on Monday as Gazprom (MCX:GAZP) said supplies through the Nord Stream 1 pipeline to Germany would drop to just 20% of capacity.

Gazprom said flows would fall to 33 million cubic metres per day from 0400 GMT on Wednesday because it needed to halt the operation of a Siemens gas turbine at a compressor station on instructions from an industry watchdog.

Germany said it saw no technical reason for the latest reduction, which comes as Russia and the West exchange economic blows in response to what Moscow calls its special military operation in Ukraine.

Nord Stream 1 is the single biggest Russian gas link to Europe, with a capacity of 55 billion cubic metres a year. The Dutch front-month gas contract, the European benchmark, was up 9.2% after the news.

The European Union has repeatedly accused Russia of resorting to energy blackmail, while the Kremlin says the disruption has been caused by maintenance issues and the effect of Western sanctions.

Politicians in Europe have said Russia could cut off gas flows this winter, which would thrust Germany into recession and lead to soaring prices for consumers already grappling with higher prices for food and energy.

Germany was forced last week to announce a $15 billion bailout of Uniper, its biggest company importing gas from Russia.


President Vladimir Putin warned the West this month that continued sanctions risked triggering catastrophic energy price rises for consumers around the world.

He foreshadowed the latest cut in comments on the Nord Stream 1 compressor last week, when he said: “There are two functioning machines there. They pump 60 million cubic metres per day … If one is not returned, there will be one, which is 30 million cubic metres.”

Russia is the world’s second largest oil exporter after Saudi Arabia and the world’s largest exporter of natural gas. Europe imports about 40% of its gas and 30% of its oil from Russia.

Gazprom resumed gas flows via Nord Stream 1 last week after a 10-day maintenance break, but only at 40% of the pipeline’s capacity – the level Russia had reduced volumes to in June, citing the delayed return of a turbine being serviced in Canada.

European politicians have challenged that explanation, with Germany saying the turbine in question was not meant to be used until September.

Gazprom said earlier on Monday it had received papers from Siemens Energy and Canada about the first turbine, but that there were still problems.

“Gazprom has studied…the documents, but has to acknowledge that they do not remove the previously identified risks and raise additional questions,” it said in a statement.

“Additionally, there are still open questions from Gazprom regarding the EU and UK sanctions, the resolution of which is important for the delivery of the engine to Russia and the urgent overhaul of other gas turbine engines for the Portovaya compressor station.”

The Kremlin said earlier that Moscow was not interested in a complete stoppage of Russian gas supplies to Europe, which is rushing to fill its underground storage before the peak demand winter season.

It said Gazprom was not to blame for the storage risks, reiterating its line that Europeans are suffering the consequences of sanctions that they themselves imposed on Russia.


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