Russia halts gas export to Europe until further notice


London (CNN Business) — Russia will not immediately resume natural gas exports to Europe through its Nord Stream 1 pipeline, worsening a shortage that threatens to plunge the continent into an energy crisis this winter.

On Friday, Russian state-owned energy giant Gazprom said it would not resume flows through the pipeline on Saturday, as planned, because it had detected an oil leak at its Portovaya compression station. The pipeline has been closed since Wednesday for maintenance.

The company did not give an estimate of when exports might resume.

“Until equipment malfunctions are resolved, gas supply to the Nord Stream pipeline has been completely stopped,” Gazprom said in a statement.

The Nord Stream 1 pipeline is a key artery transporting Russia’s vast gas supplies to Europe, accounting for around 35% of Europe’s total Russian gas imports last year.

The gas goes directly to Germany, the bloc’s biggest economy, which relies heavily on gas from Moscow to power its homes and heavy industry.

But Russia has been in an energy conflict with Europe since it invaded Ukraine in late February.

The news of the extended shutdown comes on the same day that major Western economies agreed to put a price cap on Russian oil in an attempt to limit Moscow’s ability to finance its war, while keeping a check on the world inflation. This could lead to countries blocking insurance coverage or financing of oil shipments.

Russia had already threatened to retaliate by banning oil exports to countries that apply a price cap.

The Nord Stream 1 pipeline has also been instrumental in the current economic conflict between Russia and the West.
Since June, Gazprom has reduced flows through Nord Stream 1 to just 20% of capacity, citing maintenance problems and a dispute over a lost turbine affected by Western export sanctions.

Russia has also cut supplies to several “unfriendly” European countries and energy companies over their refusal to pay for gas in rubles, as the Kremlin insists, rather than the euros or dollars listed in the contracts. European leaders have called these demands blackmail.

Earlier this week, Gazprom said it would suspend all shipments to France’s Engie from Thursday, saying it had not received full payment from the company for gas it supplied in July.

Engie said the cut was the result of “a disagreement between the parties on the application of the contracts.”

Another cut in the gas supply is the last thing Europe needs in the face of winter, when the demand for energy increases.

The bloc has increased imports from alternative suppliers and has already exceeded its storage target, but a further drop in supply could push wholesale gas prices further higher, fueling retail prices.

Consumer price inflation in the 9 countries that use the euro hit 9.1% last month, its highest level in 25 years, according to first estimates from the European Union’s statistical office.

Energy prices were the main driver of inflation, rising 38% in the year to August.

But German Chancellor Olaf Scholz declared earlier this week that his country was “much better prepared” to secure enough gas for the winter than could have been imagined a few months ago.

“We can deal quite well with the threats that come to us from Russia,” he said.

— Alex Stambaugh, Julia Horowitz, Michelle Toh, Eyad Kourdi, Rob North and Inke Kappeler contributed reporting.



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