Russia stops pure fuel deliveries to Germany once more

Gazprom, Russia’s state-owned energy giant, halted the flow of natural gas through Nord Stream 1, the critical pipeline linking Russia with Germany, early Wednesday, stoking new concerns about Europe’s energy supplies.

Gazprom said the shutdown was temporary and necessary for maintenance, although the German government and energy executives see it as politically motivated. According to Gazprom, the pipeline will start up again after three days, “provided that no disruptions are detected”. It said flows would resume at 20 percent of capacity, the same reduced level it has been providing since late July.

Energy markets will be watching closely to see if supplies resume as planned. In July, the pipeline was shut down again for 10 days for maintenance.

Like other European countries, Germany is rushing to fill up natural gas storage facilities ahead of winter to hedge against Russian shutdowns. The Russian government appears to be trying to hamper these efforts and create uncertainty about future gas supplies.

So far the results have been mixed. Germany’s gas storage facilities have reached more than 83 percent of capacity and are expected to meet the government’s target of 90 percent by November 1st.

On the other hand, power outages and supply worries over the coming months have pushed natural gas prices in Europe to record highs in recent weeks, causing some of the economic damage gas storage efforts aim to prevent.

Benchmark natural gas futures for Europe fell about a quarter from Friday’s records after European Union President Ursula von der Leyen suggested on Monday officials were working to break the link between gas and electricity prices to break through.

Gas prices fell further on Wednesday, but they remain exorbitant, about nine times what they were a year ago.

Russia said it is obliged to fulfill its gas export contracts but that Western financial sanctions imposed over Moscow’s invasion of Ukraine mean Gazprom “simply cannot fulfill them,” Kremlin spokesman Dmitry S. Peskov said. told reporters Russian state news agency Interfax.

Gazprom is not just targeting Germany. On Tuesday, Engie, a major French utility, said Gazprom had informed the company that it would cut gas supplies over a contract dispute. “Russia is using gas as a weapon of war and we need to prepare for the worst-case scenario of a complete disruption in supplies,” France’s Energy Transition Minister Agnes Pannier-Runacher told France Inter radio, Reuters reported.

On Monday, Uniper, a German utility that is one of the largest natural gas buyers and suppliers in Europe, said it had already drawn down a €9 billion ($9 billion) German government loan facility and added €4 billion more please.

Uniper said that when Gazprom’s contracted supplies fell by 80 percent, it had to buy gas on the market at significantly higher prices to supply customers, leading to losses it said exceeded 100 million euros a day.

Uniper agreed to a rescue package in July that would involve government involvement in the company, but further steps, including European Union approval, are needed before it can be fully implemented.

The company’s chief executive, Klaus-Dieter Maubach, said in a statement that Uniper is working with the federal government on “a permanent solution to this emergency.” Otherwise, he warned, the company could not fulfill its “system-critical function” as a supplier of natural gas to communities and factories.

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