Nordstream 1 resumes natural gas deliveries

Natural gas is again being delivered to Europe from Russia via the Nordstream 1 pipeline. The pipeline had been closed due to routine maintenance. A turbine undergoing repair in Canada became subject to sanctions causing worries that Nordstream 1 would not resume service at all. Those sanctions were lifted to allow the turbine to, eventually, be delivered to Russia.

Nordsteam 1 is now delivering just 40% of the natural gas it delivered before Germany imposed sanctions over Russia’s “special operation” in Ukraine. Vladimir Putin has hinted at a further disruption to natural gas supply through Nordstream 1 from July 26th when problems with other turbines may need to be addressed. Putin stated that gas flows may need to reduce further, possibly to 20%, or half of the flow currently being delivered.

Germany is desperately trying to store gas for the coming winter months. It has imposed emergency measures which, for example, limit the use of air conditioning in Government buildings, and limits the temperature of swimming pool water. If gas flows do reduce further from July 26th, it is possible that Germany will impose a class three emergency, which will ration power to businesses. This could lead to short working hours and even lay offs, and redundancies.

Uniper the major energy provider in Germany has been struggling to fulfil contracts by buying more expensive gas to supply at a loss to its customers. Bailouts have amounted, so far, to £10 billion, and the German Government has now taken a 30% stake in the largely Finnish owned company, providing a further £8 billion in capital. Uniper will now, also be allowed to increase prices to domestic users, which may fuel further inflation.

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