On 11 July, in line with previous announcements and annual practice, Gazprom stopped gas deliveries to European customers via the Nord Stream 1 (NS1) pipeline, which runs from Russia to Germany along the Baltic Sea bed.
Although the supply interruption is thought to be of a technical nature (related to planned maintenance work), a number of European commentators and officials (including Germany’s Economy Minister Robert Habeck, France’s Economy and Finance Minister Bruno Le Maire and European Commission Vice-President Valdis Dombrovskis) are concerned that supplies will not be fully or even partly restored once the interruption ends (21 July). Already in June, Gazprom reduced gas supplies via NS1 (from 167 million m3 to 66 million m3 per day), citing one of the reasons being problems related to the sanctions-related blockage in Canada of Siemens gas turbines for the compressor station being repaired there. Russian presidential spokesman Dmitry Peskov rejected accusations levelled at Moscow that the decisions were political, and indicated (on 8 July) that the return of the turbine would help boost supplies after the technical break.
On 10 July, Canada’s Energy Minister Jonathan Wilkinson announced that the government would allow an exception to the country’s sanctions and grant temporary, revocable approval for the delivery to Germany of Siemens gas turbines that are being repaired in a Siemens subsidiary in Montreal, to be later delivered to Russia’s Gazprom. According to media leaks (published in the Canadian daily The Globe and Mail on 13 July), the approval is to last for two years and applies to six turbines. The Canadian decision was criticised by the Ukrainian authorities, including President Volodymyr Zelensky. On the same day, the Ukrainian Foreign Ministry conveyed its protest in a verbal note to the Canadian ambassador in Kyiv. Also, Ukraine’s energy and interior ministries called on the Canadian parliament to halt the return of the turbine, arguing that otherwise Moscow would gain support in its hybrid war against Europe. The statement stressed that the Russian side is not taking advantage of existing opportunities to increase gas supplies through Ukrainian territory.
On 10 July, the Canadian government’s decision was welcomed by German Chancellor Olaf Scholz. On 11 July it was also supported by the US State Department. In doing so, it stated that its implementation would allow Germany and other European countries to replenish their gas stocks and protect themselves from Russian energy blackmail. On the same day, a spokesperson for the German government stated that the German side had taken note of the critical position of the Ukrainian authorities regarding the return of the turbine, and stressed that EU sanctions do not cover equipment related to the supply of natural gas. A spokesperson for the European Commission gave a similar assessment.
On 8 July, during a meeting with members of the government on the fuel and energy industry, President Vladimir Putin called on the cabinet and Russian energy companies to prepare for a Western embargo on imports of Russian energy and to intensify efforts to diversify its exports to the South and East.
On 11 July, the Krasnodar Krai court in Rostov-on-Don, following an appeal by the KTK/CPC consortium (the operator of the oil pipeline from the Kazakh Tengiz field to the Russian terminal in Novorossiysk), amended the Novorossiysk district court’s order of 5 July and replaced the suspension of the company’s activities for 30 days for environmental violations (and consequently the operation of the oil pipeline) with a fine of 200,000 roubles (currently equivalent to approximately $3,300).
On 13 July, the International Energy Agency’s (IEA) monthly report was published, showing, among other things, that Russian crude oil production increased by 490,000 barrels per day (b/d) in June – to 11.07 million b/d. Crude exports decreased in June to 7.4 million b/d, down 250,000 b/d from May this year. (Crude oil accounted for about 5 million b/d of this and oil products, whose export volume remained unchanged, accounted for about 2.4 million b/d). At the same time, Russia’s oil export revenues increased by $700m in June compared to May and exceeded $20bn per month. This was due to an increase in the average price of Urals crude oil, which in June (according to the Russian Ministry of Finance) stood at $87.25 per barrel, 10.7% higher than in May this year.
On 13 July, credit rating agency Moody’s reported that Germany’s plan to reduce its share of natural gas imports from Russia to 10% by 2024 will be very challenging (despite having already managed to reduce this percentage from 60% to 35% in April this year). Italy, on the other hand, could become completely independent of Russian gas imports by 2025. According to the agency’s assessments, the possible suspension of gas supplies by Russia via NS1 and the resulting problems would cause losses estimated at 3–6% of Germany’s GDP and 1–3% of Italy’s GDP.
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