Baltic Sea

Putin could regret his gas game with Europe

Russian President Vladimir Putin has always enjoyed deceiving European leaders. As relations between Moscow and Berlin deteriorate over reduced natural gas supplies and Ukraine-related sanctions, Putin is now brazenly pressuring his German counterpart, Chancellor Olaf Scholz. But it’s a move he might regret.

Putin suggested this week that Germany should give the defunct Nord Stream 2 gas pipeline the green light to restore gas flow to normal levels. The amount of Russian gas flowing to Germany along the operational Nord Stream 1 pipeline under the Baltic Sea is limited to 67 million cubic meters per day (MMcm/d), or about 40 percent of its technical capacity. Russia claims this was due to a technical error that could not be fixed under sanctions. Few take this excuse at face value.

Putin says certification of Nord Stream’s newly built but non-operational second phase would provide a workaround solution. The Russian head of state told journalists in Tehran this week that he raised the issue of Nord Stream 2 with Scholz about two months ago. The Scholz administration suspended the certification process following Russia’s complete invasion of Ukraine in February.

The Nord Stream 2 proposal is not serious. In theory, bringing an idle gas pipeline online could provide additional capacity to make up for lost volumes. But to believe that, one would also have to believe that Gazprom (read: the Kremlin) is acting in good faith and intends to use the capabilities at its disposal.

This is obviously not the case. There is idle capacity in pipelines in Poland and Ukraine that could be used to make up for Gazprom’s “inability” to run Nord Stream 1 at full power. Warsaw has hardened its stance on Moscow since Russia’s full-scale invasion of Ukraine, but the drop in gas flows precedes any concrete measures taken by the pipelines’ host countries to prevent their use.

Giving the green light to Nord Stream 2 would be tantamount to Germany raising a white flag in its standoff with Russia. It would also achieve exactly nothing. Despite claims by Putin to the contrary, the Russian state gas exporter Gazprom has destroyed its reputation as a reliable gas supplier by withholding gas volumes from the European market. The problem is not the amount of pipeline capacity Gazprom has at its disposal, but how the company uses it.

Gazprom cut Nord Stream 1 inflows to 40 percent on June 15. Flows were then reduced to zero during a 10-day routine maintenance period that ended on July 21, when they returned to the capped 40 percent level. Gazprom claims flows cannot surge any higher because a failed gas compressor turbine needed to pump the gas more than 1,200 km (750 miles) under the Baltic Sea cannot be returned from a Siemens service base in Canada for Ukraine reasons could sanctions.

It is significant that Gazprom waited a month before retrospectively issuing a force majeure notice to its European gas buyers over the turbine issue. And that notice — known as the “force majeure” clause — was first reported on July 18, the very same day Russian media said the repaired turbine had left Canada and headed back to Russia via Germany.

Uniper, Germany’s largest importer of Russian gas, has already rejected the decision on the grounds that the allegations are unjustified. A spokesman for Germany’s economy ministry was quoted as saying the refurbished turbine was a spare part that was not due to go into service until September, raising doubts about its absence as the real cause of the fall in gas flows.

The turbine in question is now believed to be making its way back to Russia after the Canadian government issued a temporary exemption from its sanctions package. The unit is scheduled to be reinstalled in a compressor station in Portovaya at the Russian end of the Nord Stream 1 pipeline by early August. In theory, this should allow exports to get back to full capacity, but don’t hold your breath.

It won’t be the last time. Putin says Gazprom must send at least one more Portovaya turbine back to Canada for overhaul, but cannot do so until documentation is received on the first’s legal status to confirm it is not under sanctions and will not be confiscated .

By Putin’s own admission, the opening of Nord Stream 2 would not replace the missing gas volumes on Nord Stream 1. After Germany froze the certification process, Gazprom apparently diverted half of the gas that was supposed to flow through Nord Stream 2 to “domestic consumption and processing” in Russia, meaning Russia no longer has enough gas to supply either Fill pipelines to capacity.

Proposing a politically unsavory solution to a “technical” problem is part of the normal exchange of blows in geopolitics. Proposing a technically unworkable solution to a political problem is a pointless provocation. While Putin may like to score, the European energy crisis is as much a problem for Russia as it is for Scholz and its European allies.

Industrial gas consumption will be curbed across Europe next winter to avoid blackouts if Gazprom cuts gas flows further. Industrial activity is being shut down at an alarming rate and cannot be easily reversed, meaning that even if relations between Russia and Germany are magically repaired and gas is cheap and plentiful again, gas demand will not return quickly.

For all its shortcomings, the European Union is now taking Moscow’s threat seriously, enacting legislation to force member states to cut consumption this winter while pushing ahead with longer-term plans for a future without Russian energy imports. The EU is bracing for extreme short-term economic pain but could emerge in a few years with a more resilient, albeit smaller, industrial economy and energy system.

Russia cannot easily replace European gas purchases. Pipelines to China will take many years to build, as will the capacity to liquefy and export volumes as liquefied natural gas (LNG) to global markets. Putin is plotting the demise of Russia’s main energy customer without the funds to replace him. Scholz may still have the last laugh.