Canada poised to send sanctioned Russian gas turbine at the centre of European supply dispute to Germany

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Canada and Germany are close to reaching a deal that would permit the return of a Russian gas turbine whose absence Moscow is blaming for its decision to reduce gas supplies to Europe, according to a senior Canadian official.

The turbine, built by Germany’s Siemens Energy Canada, is being repaired at the company’s Montreal facilities. But its return to Russia has been complicated by sanctions Canada introduced after Moscow’s full-scale invasion of Ukraine. Those sanctions forbid the export of certain goods and technologies to Russia, including the turbine.

The European Union also imposed new sanctions on Russia after the start of the invasion, and the bloc has spent the ensuing months reconciling its opposition to the war with its need for Russian fuel. The resulting uncertainty has plunged the continent into an energy crisis, with Germany bracing for gas rationing during the winter months.

The official said Canada and Germany are in discussions with Ukraine, which has opposed the idea of skirting sanctions to return the turbine, and that a decision on releasing the device is days away. The official, whom The Globe and Mail is not naming because they were not authorized to discuss the negotiations publicly, added that there is still more work to be done, but that all sides are working for a “positive resolution.”

The Ukrainian embassy in Ottawa said it hoped Canada would stay committed to full sanctions against Russia. “We are aware of the dialogue between Canada and Germany regarding the Siemens turbine and do hope that the Government of Canada will ensure full integrity of the current sanctions regime,” said Oksana Kyzyma, First Secretary at the Ukrainian embassy.

Gazprom, the Russian state-owned natural gas company, has blamed the missing turbine for its decision to cut capacity along the Nord Stream 1 gas pipeline, which runs under the Baltic Sea to Germany, by as much as 60 per cent. The Kremlin said on Friday that it would increase gas supplies to Europe if the turbine is returned.

The official said Russia has an extra turbine it could put into operation, and is using the sanctioned turbine as an excuse to apply economic pressure to Europe. Returning the turbine would eliminate that excuse, the official said.

Reuters reported Friday, citing a German government source, that a decision to return the turbine had already been made. The turbine will be sent to Germany, which will then deliver it to Gazprom so that Canada does not breach any sanctions, a government source told Reuters.

At a news conference on Friday, Steffen Hebestreit, chief spokesperson for German Chancellor Olaf Scholtz, would say only: “I can confirm that there are positive signals from Canada. I cannot yet confirm that a delivery is on its way.”

The Canadian official said a final decision has not been made, but acknowledged that the matter is urgent. The official added that Canada understands Germany and Europe want the turbine returned to help the continent replenish its supplies of Russian natural gas before the winter months.

The official said Germany is a close friend of Canada, and noted that Europe will be dependent on Russian natural gas until it can find other dependable sources.

Mr. Scholz raised the turbine issue directly with Prime Minister Justin Trudeau at a G7 meeting in Germany in late June. The chancellor is planning a trade visit to Ottawa on Aug. 22 and 23 to push for the construction of liquefied natural gas export facilities on Canada’s East Coast, which would enable Europe to replace some of the Russian supply with Canadian fuel. A German official said Berlin is hoping the turbine dispute can be resolved before the visit. The Globe is not identifying the official because they were not authorized to discuss the issue publicly.

On Thursday, Germany’s Vice-Chancellor and Economy Minister, Robert Habeck, appealed to Ottawa to release the turbine in order to allow Europe to replenish its gas supplies. He said the return of the turbine to Germany would remove the excuse that Russian President Vladimir Putin has used to slash gas flows to Europe.

Keean Nembhard, press secretary to Canada’s Natural Resources Minister, Jonathan Wilkinson, would neither confirm nor deny that a deal to return the turbine is imminent.

Sabine Sparwasser, Germany’s ambassador to Ottawa, told The Globe on Thursday that she understands the Trudeau government is under pressure from Ukraine and the Ukrainian-Canadian community not to return the turbine.

“Europe and Germany are very supportive of sanctions … but we also said we should not take sanctions that hurt us more than they hurt Russia,” she said.

Oksana Kyzyma, first secretary at the Ukrainian embassy in Ottawa, said the embassy hopes Canada’s government “will ensure full integrity of the current sanctions regime.”

Ukrainian Canadian Congress national president Alexandra Chyczij wrote to Prime Minister Trudeau on Wednesday to stress the importance of not returning the turbine and ensuring that all sanctions on Moscow remain in place.

“Russia seeks to set a precedent for the waiver of sanctions which will then be used to extract more waivers of sanctions and to undermine Western unity. We urge the Government of Canada to see through this obvious ploy and to use its good offices to broker a solution which does not involve the waiver of sanctions,” Ms. Chyczij wrote.

Ms. Chyczij added that Ukraine has offered what he called an “attractive alternative, namely a discount on the use of Ukraine’s transit pipelines to transit gas to Germany and the EU.”

With a report from Reuters

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Editor’s note: An earlier version of this story incorrectly named the Natural Resources Minister. He is, in fact, Jonathan Wilkinson.