Gazprom, Russia’s state-owned gas supplier, announced on Friday afternoon that a routine maintenance check found oil leaking from the main gas turbine compressors on the Nord Stream 1 pipeline, which brings gas from Siberia to northern Germany via the Baltic Sea. Gazprom, after numerous unusually long maintenance outages, said it would eventually take an indefinite amount of time to repair the leak.
And markets reacted immediately to the halt in supplies. The price of the key gas futures contract for October delivery in the Title Transfer Facility (TTF) virtual trading hub in the Netherlands gained around 30 percent. Later, its growth moderated, around 08:30 SELČ it showed an increase of roughly 20 percent to 257 euros (about 6300 CZK) per megawatt hour (MWh).
Russia’s announcement, seen by EU countries as a fairly transparent blackmail, came hours after G7 finance ministers pushed through an elaborate plan to cap Russian oil prices originally proposed by the United States. The aim is to introduce this limit as early as December, as a result of which Putin would lost the resources needed to finance the war in Ukraine for the winter period.
Until now, Gazprom has been in an advantageous position where falling European demand for Russian energy has not led to a drop in income due to rising global energy prices. What was new in the G7 finance ministers’ announcement was that the US had succeeded in getting a hitherto skeptical Germany to seriously consider the proposal.
How to lower the price of Russian oil? Do not insure ships!
As soon as the G7 leaders’ meeting ended in June, senior US officials traveled to London to discuss with the Treasury how the idea might work. The plan mainly consists of asking shipping insurance providers to stop insuring any tanker that plans to sell oil above the price ceiling set by the G7 group.
However, this bold market intervention has many internal flaws. The insurers claim that they do not know the price of the oil that the ship insured by them will sell. For the system to work, it may require the participation of neutral oil-importing countries like India, otherwise Russia will simply find a new outlet for its oil. The Greek shipping industry would be particularly affected.
Despite the work since the G7 meeting, no agreement has been reached on a specific price ceiling and there are not exactly words of support from London’s insurance industry. The plan therefore remains at the level of theory for a long time.
Putin has strong levers, but they can take revenge on him
In response, Putin has not been too idle and already has quite strong levers at his disposal. First, it reduced supplies through Nord Stream 1 to just 20% of normal levels, contributing to a huge increase in gas prices. Now he has probably decided to grab the European countries right by the throat and, under the pretext of fixing a complex technical problem, has completely closed the gas pipeline indefinitely.
A number of geoparks of European importance could be created in Ukraine, but because of the war, this is more of a task for the future. Some of these territories are now occupied by Russia. Jurij Zinko from the Ivan Franko National University in Lviv told journalists today at a press conference at Dom Natura in Příbram.
Together with other experts from the Czech Republic and abroad, Zinko is participating in a conference in Příbram on geoparks, geoeducation and geotourism in the countries of the Eastern Partnership, including Ukraine. The meeting, supplemented by trips to Czech national geoparks, is part of the events for the Czech presidency in the EU.
A geopark designates an area with interesting and rare geological phenomena, an attractive tourist offer and an active local community. Deputy Minister of the Environment Eva Volfová reminded that there are ten national geoparks in the Czech Republic. The most important is the Bohemian Paradise, which is the only one on the prestigious UNESCO World Heritage List. The largest geopark is Barrandien, which covers the Central Bohemia and Pilsen Regions and Prague and includes, for example, Brdy.
Russia could send gas to Europe via other routes to compensate for the shutdown of the Nord Stream 1 pipeline, but has chosen not to. This was stated today by the spokesperson of the European Commission (EC), according to which Moscow uses gas as a weapon. European countries are partially dependent on natural gas.
The countries of the European Union are facing another significant increase in the price of gas in response to the interruption of supplies by the Nord Stream 1 gas pipeline. The Russian gas company Gazprom approached him last week. According to Gazprom, the shutdown, which was originally planned for three days, revealed a defect, due to which the gas pipeline will continue to be out of service. Gazprom is controlled by the Kremlin.
A spokesman for the EU executive said today that Russia can make up for the shortfall by increasing supplies through additional pipelines. “If there was the will, it would be possible to transport gas to Europe through other gas pipelines. We don’t see anything like that.” said spokesman Tim McPhie.
Putin’s regime continues to destroy independent journalism. A Moscow court revoked the media license of the liberal and opposition newspaper “Novaya Gazeta”. Dmitry Muratov, its editor-in-chief and a Nobel Peace Prize laureate, described the decision as “nonsense and politically mandated”.
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On Wednesday, Russia already interrupted supplies through the Nord Stream 1 gas pipeline due to maintenance work. According to the original information, the shutdown was supposed to end on Saturday morning. However, Gazprom said at the weekend that maintenance carried out together with representatives of Siemens Energy revealed an oil leak at the Portovaya compressor station, making it impossible to ensure safe operation.
However, there is a risk that such a move could backfire on Putin. Especially if the powerful Russian gas companies begin to believe that his actions immediately threaten their livelihood. Some Russian officials share the view that if Russia really intends to seriously damage German industry, it must strike immediately.
Power outages as a real threat
Germany says it has a slight lead in its efforts to fill gas storage tanks to 80% capacity. But German industrialists and politicians have warned that even then, the shutdowns could lead to blackouts and possible mass layoffs. There is no doubt within the EU that Putin has been manipulating gas supplies for several months. The scenario that Germany (and many other countries) have been repeatedly warned against is thus being fulfilled. That is, if Berlin becomes too dependent on cheap Russian gas, Moscow will use the opportunity to weaken the country.
“Gazprom’s announcement of the re-closure of Nord Stream 1 under obviously false pretenses is further evidence of its unreliability as a supplier,” said the chief spokesperson of the European Commission, Eric Mamer. “It is also proof of Russian cynicism,” he added.