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Nord Stream: Is Europe's gas permanently stopped?

Analysts fear Russia won’t restart key pipeline after ‘maintenance.’

Because of growing concerns that a major pipeline carrying Russian gas to Europe could be permanently closed, EU leaders are preparing for a gas supply shortage that could paralyse entire sections of the bloc's economy.

The possibility of wealthy European nations having to limit their energy consumption and determine whether to shut down important sectors grew more likely on Monday as the Nord Stream pipeline's natural gas supply to Europe reached zero.

The interruption was part of a 10-day outage that was planned, but analysts and officials are concerned that Russia's Gazprom, which has already stopped supplying gas to 12 EU nations or reduced it, may decide not to restart the Nord Stream pipeline after the maintenance work is through.

German Vice Chancellor Robert Habeck on Sunday described such a move as a "political nightmare scenario," warning that it would further destabilise an economy like Germany's where energy-intensive firms may be paid to lower usage.

The focus is currently on Nord Stream.

“What happens after the maintenance? What does it go back to afterwards? That's what everyone will be following,” said Ed Cox, head of global liquefied natural gas (LNG) at commodity intelligence firm ICIS.

According to some analysts, Russia is unlikely to restore the pipeline and would look for justifications to keep it closed longer than the required 10-day maintenance break.

According to Alexander Gabuev, a senior fellow at the Carnegie Endowment for International Peace in Washington, this scenario is "pretty likely," and he claims that a complete shutdown of the gas supply to Europe was a crucial weapon in Russian President Vladimir Putin's arsenal to split Europe over Ukraine before the worst effects of a gas shortage would be felt in the coming winter.

Gas is undoubtedly the Kremlin's trump card, according to Gabuev.

France's finance minister, Bruno Le Maire, voiced that fear on Sunday, saying a total shutdown of Russian gas to Europe was "the most likely option," and that countries needed to "put ourselves in order of battle as of now.”

On July 20, EU officials in Brussels will publish a winter preparedness plan that will attempt to ensure countries have enough gas to get through the winter. But details of the plan are vague so far.

The situation is obviously serious, and we must be appropriately ready for any contingency, according to a European Commission official on Monday.

Bailouts for energy corporations, governmental ownership of power plants, and gas rationing for business are some further possibilities being considered.

Gas brinkmanship

An cheerful attitude three months ago in Brussels, where top officials declared a concerted pivot away from Russian gas and a target to reduce dependence by two-thirds this year, contrasts sharply with the climate of panic in Paris and Berlin.

Frans Timmermans, executive vice president of the European Commission, noted at the time "It's not easy but it's feasible,"

By importing more Russian gas by June 16 than it had planned for the entire year, the EU had already fallen short of that ambitious goal. Even with Moscow cutting off supplies to some EU nations while reducing deliveries to others, that remains the case.

While Nord Stream shuts down for its annual inspection, European gas markets are currently holding their breath.

A momentary panic broke out Monday after major energy giant Eni in Italy reported that its daily deliveries from Gazprom had dropped from 32 million cubic metres to 21 million.

However, as opposed to what some had feared, the lower supply was due to the closure of Nord Stream and not to a further reduction in Russian flows through other pipelines that cross Ukraine or through the Turkstream pipeline branch that runs through Bulgaria.

However, Russia has historically routed extra gas via other lines to make up for the decreased supply caused by Nord Stream repairs. So far this year, it hasn't done that.

Russia is already using energy supply as a negotiating chip to try and split Western unity and have sanctions against Moscow withdrawn as its invasion of Ukraine advances.

The potential of "raising" gas flow through Nord Stream starting on July 21 was floated by Kremlin spokesperson Dmitry Peskov on Friday, but only if Canada agreed to let a gas turbine that is essential to the pipeline's operation but is now being repaired in Montreal return.

Canada's natural resources ministry confirmed via email to POLITICO that via a one-time sanctions exception, the nation would release a total of six turbines to Nord Stream.

Berlin and the United States applauded, but Kiev was upset because it had secretly urged Ottawa not to return the pieces.

Volodymyr Zelenskyy, president of Ukraine, stated on Monday that Moscow will only see the decision to make an exception to the sanctions as a sign of weakness. "There can be no doubt that Russia will make every effort to entirely halt the flow of gas to Europe at the most critical time, rather than just restrict it as much as possible. This is what is currently being triggered, and this is what we need to prepare for."

'Shorter showers, lower heat'

Europe has few options for finding a different gas source if Moscow doesn't resume Nord Stream.

A record amount of seaborne liquefied natural gas, primarily from the U.S., arrived in the EU earlier this year. The bloc's intentions to rely on the Americans, at least for the remainder of this year, were jeopardised by the June explosion and outage at a crucial Texas export facility.

Gulf nations have promised to increase supply, but these offers include political conditions, such as Oman's demand for its nationals to travel to the EU without a visa.

“We're in a situation where there are limits to how much other sources of gas you can get into Europe and there are limits on what LNG can do,” said Tom Marzec-Manser, head of gas analytics at ICIS. "We’re pretty much on top of those limits.”

Piped gas from nearby countries like Azerbaijan and Norway has increased, and Oslo last month approved an increase in production to help with exports. Companies on the Norwegian shelf "now produce at their maximum level, or very close to this," the Norwegian government said.

The Netherlands revealed that it had so far this year managed to reduce energy use by a third, potentially enabling some additional gas to be diverted to neighbours. But Dutch Climate Minister Rob Jetten cautioned that it would be a "last resort" to ratchet up Europe's largest earthquake-prone field in Groningen to save the day.

An earlier version of this year, Fatih Birol, the director of the International Energy Agency, put it bluntly this way: “Either governments or utilities will have to ration themselves — cut the energy to the consumers — or we do it ourselves, pushing the energy efficiency button."

If Russia cuts off all gas supply, EU nations will need to reduce demand by 15% over the following 10 months, according to a study by the Bruegel think tank. Governments in Finland and the Baltic nations may need to make cuts of up to 54%.

Leaders and CEOs are publicly pleading for restrictions, which would have been unthinkable just a few months ago, as the tone becomes gloomier.

In a combined op-ed, the CEOs of three of France's biggest energy companies begged citizens to conserve energy.

In order to avoid a crisis, Dutch lawmakers have asked individuals to take shorter showers and turn down their heaters.

Following the activation of a stage-two emergency warning last month, local authorities in Germany are turning to measures like lowering pool temperatures and dimming street lights.

Furthermore, although EU parliamentarians applauded progress on a new obligatory gas supply regulation that would compel storage to be filled to 80% by November, negotiators are still savagely fighting over who will pay for the gas and who will have first access in an emergency.

According to real-time statistics, the storage levels are currently at 61.6 percent.

The storage capacity of the bloc can hold around a fifth of its yearly consumption when it is full. However, the facilities are not built to be brought down to zero, and they are dispersed unevenly over the Continent, making equal access in an emergency far from certain.

Looking out for No. 1

At least ten EU nations have already started implementing their emergency preparedness plans' initial "early warning" stages, as required by Brussels since 2017.

Germany, which depends heavily on Russian gas, is the only nation to have started the second step. Berlin would be able to control the market and act as the nation's energy supply coordinator by starting the third stage, choosing which sectors would be disconnected first.

According to Simone Tagliapietra, a senior energy expert at the Bruegel think tank, in such a situation, lawmakers would probably begin by cutting off non-essential sectors like the automobile industry, then move on to other businesses, social services, and lastly household heating.

German and Czech officials simultaneously vowed on Monday to “stand united to provide operational cooperation and coordination in case of complete disruption of gas supplies which may occur in upcoming weeks."

However, many worry about a situation in which each state protects its own boundaries' supply of gas.

In order to share gas in times of need, the European Commission invites nations to establish voluntarily cross-border "solidarity agreements."

Only six of these agreements have been made so far, and Tagliapietra noted that because there is no enforcement mechanism in place for these bilateral agreements, "the worry is that that might not be strong enough."

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