The second Siemens turbine will no longer be in use, the major Russian energy corporation Gazprom stated on 25 July 20222 reported by Russian business daily Kommersant. As a result, starting from today (27 July 2022), the supply through the Nord Stream 1 pipeline will not be greater than 33 million cubic meters per day, or 20% of the pipeline’s capacity.
This comes after a dispute involving a Siemens turbine that was transported to Montreal for maintenance but was delayed in returning because of Ottawa’s sanctions against Moscow. The delay was the cause of a 60 percent decrease in gas flow to Germany last month, according to Gazprom. Canada ultimately shipped the component to Germany, where it is currently en route to Russia. Earlier on 25 July 2022, Gazprom stated that the documentation it had obtained from Canada and Siemens detailing the shipment of the turbine did not answer any queries pertaining to sanctions.
After reaching compromise agreements to restrict cutbacks for some nations, the European Union members, bracing for additional reductions in Russian gas supply, approved a limited emergency plan to reduce demand on 26 July 2022. Brussels is advising EU members to save gas and store it for the upcoming winter, as a dozen EU nations are already experiencing reduced Russian supply due to sanctions over the Ukraine war.
While Europe swelters in the heat, some of its leaders are in talks with new gas suppliers to try to keep the heating on this winter as the continent is geopolitically compelled to deal with the gas crisis due to its war-fueling stance in Ukraine. However, many believe that the energy crisis in Europe will not be resolved by new gas sources; thus, Europeans will be forced to reduce their energy usage.
After an earthquake caused an accident at the Fukushima Daiichi nuclear power plant in 2011, Chancellor Angela Merkel announced that Germany would shut down its final three nuclear power plants by the end of the year. However, the foundation for this decision had already been laid by the previous Social Democrat-Green coalition government in 2000. In order to reach carbon reduction goals, it also intends to stop using coal power by 2038 at the latest, and preferably by 2035. Renewable energy source development, which surged at the beginning of the 2010s, has slowed down recently. Very recently, Germany, one of the biggest vocals of renewable and green energy, started firing up coal power plants. However, it was just the last year when Germany agreed to provide €237 million as soft loan for renewable energy and energy efficiency projects in Bangladesh, exclusively aimed at limiting the number and operation of traditional coal-based power plants.
The economy became more dependent on Russian gas due to the set exit dates and Germany’s gradual liberalization of its energy market since the late 1990s. Russian gas is not only affordable and available to Europe but also one of the biggest geoeconomic instrument for Russia. Even if Germany decides to move away from Russian gas, a dilemma remains. A significant portion of German industrial production is outsourced to close EU neighbors, particularly Hungary and Slovakia. These nations rely on Russian gas even more than Germany does. Therefore, they cannot rely on the European geopolitics when it comes to the energy crisis. They seek a balanced approach to end the crisis, not to aggravate it.
Finland, Poland, and Bulgaria’s refusal to pay in rubles has already resulted in Russia ceasing to provide them gas. Additionally, there is already a “very substantial risk” that Moscow would fully cut off gas supply to the rest of the continent before the winter.
The EU pledged in March to cut its reliance on Russian gas imports by two-thirds within a year, but it has been unable to agree on an outright embargo due to concerns about how such a move may affect the economies of various states.
The EU is rushing to finalize new contracts with Azerbaijan so that the gas may be transported through Turkey and into Southern Europe via a pipeline. In the future, gas could possibly originate in Central Asia, which is further away. A pipeline from Turkmenistan to the Caspian Sea has been completed. The Caspian Sea might be crossed by an undersea pipeline to provide the gas to the Azerbaijani network.
The crisis in Europe is a big business opportunity for US. By diverting American liquefied natural gas from Asian to European markets, the United States is enabling its European allies. The United States has become the leading natural gas producer in the world over the last ten years. In fact, despite its high domestic consumption, the United States today ranks second only to Russia in terms of gas exports.
However, in order to be able to import enough LNG to counteract the enormous anticipated rise in demand for Russian pipeline-delivered gas, Europe would have to invest more than it has already in regasification facilities. Unfortunately for Europe, it will be difficult to increase the volume of gas imports as quickly as is necessary. Gas from the United States must be compressed into liquid form before being shipped to Europe. The construction of new liquefaction plants is a challenging and expensive project that might take five years, or even four years if regulatory permits are expedited.
The EU has not yet secured a more affordable gas offer from other sources than what Russia provided prior to the Ukraine War. The saying “imposing sanctions might be counterproductive” is often used in reference to the wave of sanctions on Russia and its subsequent effects. As we have seen throughout the course of human history, hardship and tragedy also have a relationship-breaking effect. If solutions are not found, the hardship can lead to a greater political chaos in Europe strong enough to become a threat for EU’s unity. Therefore, the EU’s economic trade negotiators are now desperate to find alternate sources of gas and energy with reasonable price, or else Europe would experience a brutal winter lasting longer than the weather prediction.