The Danish and Swedish officials report that the Nord Stream pipelines connecting Russia and Germany, which are currently out of operation owing to the conflict in Ukraine, suffered abrupt and unexplainable losses in the Baltic Sea.
Nord Stream AG, the network operator, reported “unprecedented” damage to three offshore lines of the Nord Stream 1 and 2 pipeline systems, saying that it is hard to predict when the system’s functioning capacity will be restored.
Swedish officials spoke of two Nord Stream 1 breaches, one in the Danish marine economic zone and the other in the Swedish one. According to reports, the two leaks are fairly close to one another. The Swedish side said that the leak sites in its special economic zone and the same area in Denmark are located not far from each other – to the northeast of the island of Bornholm.
Earlier, a sharp pressure drop occurred in the Nord Stream 2 gas pipeline for an unknown reason. According to the latest information, the incident happened on the gas pipeline segment located in Danish territorial waters.
Nord Stream 2 was full of gas and ready to begin pumping from Russia to Germany. Even if Germany were to authorise gas pumping, this “option” is becoming more improbable since the issue must be removed.
Nord Stream 2 runs from the coasts of Russia through the Baltic Sea to Germany and consists of two routes with a total capacity of 55 billion cubic meters of gas per year. Construction lasted three years and was completed on September 10 2021. The pipeline is fully ready for operation and filled with technical gas, but Germany first suspended certification and, after the Russian invasion of Ukraine began, completely blocked the project.
Denmark has announced the creation of a five-nautical-mile security zone at the location. At the same time, the Swedish Maritime Administration has cautioned the nearby boats to maintain a safe distance of 5 nautical miles (about 9 kilometres) from the locations. It is a carefully calculated safety zone. The Maritime Administration also issued warnings for “aircraft with a safety altitude of one thousand metres.”
Sabotage Suspected
In the meanwhile, there are suggestions from Sweden that the breach of the Nord Stream 1 and Nord Stream 2 gas pipelines’ integrity was intentional. Similar speculation is expressed in the German news source Tagesspiegel, which, citing security officials, writes that there is no plausible scenario in which issues with the gas pipeline might be technological.
Jürgen Trittin, a member of the Green Party and the Bundestag, said that “underwater sabotage” may have occurred. At the same time, Germany acknowledges that sabotaging an undersea gas pipeline is exceedingly difficult and requires technical expertise.
Dmitry Peskov, the spokesperson for the Russian president, stressed that the investigation is continuing and that no explanation can be ruled out, including sabotage.
Why is Russia not exporting natural gas from the pipelines?
Until the beginning of this month, Nord Stream 1 was transporting gas to Germany. However, Russian energy giant Gazprom turned off the flow, citing the necessity for urgent repairs on vital components.
German authorities have disputed state-owned Gazprom’s explanation of technical issues, claiming that the disruption is a power move in reaction to Western sanctions.
Gazprom halted deliveries via Nord Stream 1 in mid-June, citing a delay in the return of a turbine sent to Canada for maintenance.
Two days before Russia’s invasion of Ukraine, German Chancellor Olaf Scholz stopped the certification of the completed Nord Stream 2 pipeline.
Germany has been significantly reliant on imports of fossil fuels from Russia to cover its energy requirements for a long time but has been compelled to seek other sources since the outbreak of conflict in Ukraine.
Regardless of the final cause of the Nord Steam pipeline breach, it is becoming more evident that the situation in the European gas market is deteriorating. Despite support for anti-Russian sanctions, Germany “kept in mind” the possibility of opening the tap and beginning gas imports from Russia through this pipeline “at the appropriate time.” This option has been removed for Germany and Europe as a whole. The German parliament is concerned that Nord Stream will never provide Germany gas.
Price volatility
After falling to $1,600, the price of gas in Europe increased to $1,800 due to the issues with gas pipelines. Currently, the price of gasoline on EU markets is around $1,830 per 1,000 cubic meters.
In Europe, the price of gasoline almost doubled between June and the beginning of September. After Russia stated in early September that it would cease pumping gas via the Nord Stream 1 pipeline to Germany, the price reached an all-time high.
On Monday, September 5, the benchmark gas price reached €272 ($261) per megawatt-hour (MWh), a 30% increase over the previous Friday’s closing price. The Dutch gas futures contract for October has decreased to around €256, which is still almost 400% higher than a year ago.
This year’s price increase has further burdened Europe’s already struggling consumers and even caused some companies to reduce output. Compared to the five-year average, EU residential and commercial gas consumption is around 12% lower, while industrial demand is 30% lower, or 14% lower, compared to 2021.
Sabotage suspected as gas leaks from Nord Stream 1 and 2, gas prices turn volatile
The Danish and Swedish officials report that the Nord Stream pipelines connecting Russia and Germany, which are currently out of operation owing to the conflict in Ukraine, suffered abrupt and unexplainable losses in the Baltic Sea.
Nord Stream AG, the network operator, reported “unprecedented” damage to three offshore lines of the Nord Stream 1 and 2 pipeline systems, saying that it is hard to predict when the system’s functioning capacity will be restored.
Swedish officials spoke of two Nord Stream 1 breaches, one in the Danish marine economic zone and the other in the Swedish one. According to reports, the two leaks are fairly close to one another. The Swedish side said that the leak sites in its special economic zone and the same area in Denmark are located not far from each other – to the northeast of the island of Bornholm.
Earlier, a sharp pressure drop occurred in the Nord Stream 2 gas pipeline for an unknown reason. According to the latest information, the incident happened on the gas pipeline segment located in Danish territorial waters.
Nord Stream 2 was full of gas and ready to begin pumping from Russia to Germany. Even if Germany were to authorise gas pumping, this “option” is becoming more improbable since the issue must be removed.
Nord Stream 2 runs from the coasts of Russia through the Baltic Sea to Germany and consists of two routes with a total capacity of 55 billion cubic meters of gas per year. Construction lasted three years and was completed on September 10 2021. The pipeline is fully ready for operation and filled with technical gas, but Germany first suspended certification and, after the Russian invasion of Ukraine began, completely blocked the project.
Denmark has announced the creation of a five-nautical-mile security zone at the location. At the same time, the Swedish Maritime Administration has cautioned the nearby boats to maintain a safe distance of 5 nautical miles (about 9 kilometres) from the locations. It is a carefully calculated safety zone. The Maritime Administration also issued warnings for “aircraft with a safety altitude of one thousand metres.”
Sabotage Suspected
In the meanwhile, there are suggestions from Sweden that the breach of the Nord Stream 1 and Nord Stream 2 gas pipelines’ integrity was intentional. Similar speculation is expressed in the German news source Tagesspiegel, which, citing security officials, writes that there is no plausible scenario in which issues with the gas pipeline might be technological.
Jürgen Trittin, a member of the Green Party and the Bundestag, said that “underwater sabotage” may have occurred. At the same time, Germany acknowledges that sabotaging an undersea gas pipeline is exceedingly difficult and requires technical expertise.
Dmitry Peskov, the spokesperson for the Russian president, stressed that the investigation is continuing and that no explanation can be ruled out, including sabotage.
Why is Russia not exporting natural gas from the pipelines?
Until the beginning of this month, Nord Stream 1 was transporting gas to Germany. However, Russian energy giant Gazprom turned off the flow, citing the necessity for urgent repairs on vital components.
German authorities have disputed state-owned Gazprom’s explanation of technical issues, claiming that the disruption is a power move in reaction to Western sanctions.
Gazprom halted deliveries via Nord Stream 1 in mid-June, citing a delay in the return of a turbine sent to Canada for maintenance.
Two days before Russia’s invasion of Ukraine, German Chancellor Olaf Scholz stopped the certification of the completed Nord Stream 2 pipeline.
Germany has been significantly reliant on imports of fossil fuels from Russia to cover its energy requirements for a long time but has been compelled to seek other sources since the outbreak of conflict in Ukraine.
Regardless of the final cause of the Nord Stream pipeline breach, it is becoming more evident that the situation in the European gas market is deteriorating. Despite support for anti-Russian sanctions, Germany “kept in mind” the possibility of opening the tap and beginning gas imports from Russia through this pipeline “at the appropriate time.” This option has been removed for Germany and Europe as a whole. The German parliament is concerned that Nord Stream will never provide Germany gas.
Price volatility
In Europe, the price of gasoline almost doubled between June and the beginning of September. After Russia stated in early September that it would cease pumping gas via the Nord Stream 1 pipeline to Germany, the price reached an all-time high.
On Monday, September 5, the benchmark gas price reached €272 ($261) per megawatt-hour (MWh), a 30% increase over the previous Friday’s closing price. The Dutch gas futures contract for October has decreased to around €256, which is still almost 400% higher than a year ago.
This year’s price increase has further burdened Europe’s already struggling consumers and even caused some companies to reduce output. Compared to the five-year average, EU residential and commercial gas consumption is around 12% lower, while industrial demand is 30% lower, or 14% lower, compared to 2021.
US investment bank Goldman Sachs expects European wholesale natural gas prices to fall from the current level of approximately €215 per MWh to below €100 by the end of the first quarter of next year — but only if Europe experiences “typical winter weather conditions,” i.e., temperatures similar to those of previous years.
