A turbine needed to transport Russian natural gas to Germany has become mired in Canadian sanctions against Moscow, leading to a sharp drop in flows in a key Russian pipeline and contributing to a surge in European natural gas prices on Tuesday.
Gazprom, the Russian gas monopoly, said on Twitter: on Tuesday that it reduced the volumes it sends to Germany through the Nord Stream pipeline by about 40 percent because a turbine sent for repair was not returned “on time.” It said it would not be able to supply the full amount of gas normally sent to Germany without the machine.
Siemens Energy, the Munich-based manufacturer of the turbine, largely confirmed Gazprom’s statement. It said in a statement that it had overhauled the machine at a specialist factory in Montreal but that it was “currently impossible” to return it to Gazprom “due to sanctions imposed by Canada.”
Siemens Energy said it had notified the Canadian and German governments of the situation and was “working on a viable solution”.
The snafu helped increase natural gas futures prices by 16 percent on the Dutch TTF exchange to about 97 euros per megawatt hour. That’s less than half of the high reached in March, when fears of a close by Moscow were high, but still about five times the price of a year ago.
To add further upward pressure on prices, a major liquefied natural gas export facility in Texas called Freeport LNG said Tuesday it would take 90 days, much longer than initially expected, before even partially returning from a fire. from last Wednesday. In recent months, Freeport LNG has been a major exporter of natural gas to Europe and elsewhere, helping to alleviate a supply shortage.
The two events seemed to pose little imminent threat that Germany or Europe would run out of fuel any time soon. Summer is a season of relatively low demand for gas, which is used for heating, and Europe is rapidly building up its stocks in preparation for next winter.
“There are no imminent supply problems,” said Henning Gloystein, director for energy, climate and resources at Eurasia Group, a political risk firm.
And in a tweet on Tuesday, the German ministry responsible for energy said the security of natural gas supply was: “unchanged guaranteed.”
However, with the war in Ukraine continuing and Russia still a major supplier of gas to Europe, any interruption quickly translates into market turbulence.
At the urging of the European Union, Europe has quickly built up its gas reserves, hoping to avert fears of shortages or a shutdown by Russia, which have pushed prices to astronomical levels since last summer.
Gas storage facilities in the European Union are about 52 percent full, 10 percent better than a year ago. In recent weeks, Europe has been importing a surplus of gas through pipelines from Russia and elsewhere, and shipments of liquefied natural gas from the United States and other suppliers.
Gloystein said the fire at the Texas plant and Gazprom’s actions on Nord Stream cast doubt on whether the rapid fill of storage will continue, sparking new concerns about “severe price spikes or even supply shortages this winter”.
Christopher F. Schuetze reporting contributed.
