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Natural Resources Minister Jonathan Wilkinson rises during Question Period in the House of Commons on Parliament Hill in Ottawa on June 7.PATRICK DOYLE/The Canadian Press

The federal government says it is in talks to resolve the case of a Russian-owned gas turbine stranded in Montreal because of Canadian sanctions against Moscow.

Citing the delayed return of equipment being serviced by Germany’s Siemens Energy in Canada, Russia’s state-controlled Gazprom has cut the capacity along the Nord Stream 1 pipeline – which runs under the Baltic to Germany – to just 40 per cent of usual levels in recent days. Germany’s energy regulator has disputed this explanation, saying it does not explain the reduction.

“The Government of Canada is in active discussions with Germany about the turbines in question, and we are working to reach a resolution,” said Keean Nembhard, press secretary for Natural Resources Minister Jonathan Wilkinson.

The department of Global Affairs, which has the lead on sanctions matters, declined to comment on why the turbine is grounded and referred questions to Mr. Wilkinson’s office.

Gazprom is one of many Russian companies hit by sanctions from Canada sparked by the Ukraine war. The type of gas turbine under repair in Montreal is on Ottawa’s Restricted Goods and Technologies List of products that cannot be exported, in order to “deny Russia access to goods and technology that could benefit their military.”

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Trade lawyer Mark Warner described the matter as a case of less-than-nimble application of measures meant to inflict pain on Russia – but which could be hurting European gas consumers as well.

“This is part and parcel of a very muscular approach the Canadian government has taken to sanctions – even when Canada’s interests are indirect at best,” he said. “I hope someone in Ottawa is really thinking long and hard about how these sanctions work.”

He believes the gas turbine should not be caught up in sanctions. “Companies like Siemens are going to think twice about having stuff like this repaired in Canada.”

Siemens Energy said in a statement this week that it supplied so-called aeroderivative gas turbines for a compressor station for Nord Stream 1 in 2009. These were manufactured in Canada and need to be regularly sent back for maintenance, it said, adding that one of the turbines was currently being overhauled in Montreal.

Cyndee Todgham Cherniak, a trade lawyer, said she sees three possible explanations for the delay in returning the turbine.

The Canadian government may be reviewing an application for ministerial authorization to release the turbine and the paperwork is in process, she said. Or the Canadian government is seeking an end-use certificate from those shipping the turbine to attest it won’t be diverted to Russia or to a sanctioned person or entity, she added.

“We’re not going to let it leave unless we get the certifications that Canadian government would like.”

A third possibility, Ms. Cherniak said, is that another government, such as the United States, is aware of the transaction and has urged Canada not to release the turbine because they believe it will be diverted to Russia.

For sanctions to work, Canada must be willing to reject requests for easing even when the decision is difficult, she said.

“By keeping it in Canada at the port, we have got assurances it won’t go to the wrong person or the wrong country and there won’t be circumvention. As soon as it leaves Canada, Canada Border Services Agency no longer has control over it and we, Canada, no longer have control over it.”

Denying the turbine to Gazprom increases the pain from sanctions and puts more pressure on Russia to change its course of action, she said. “You have to make it so Gazprom is hurting and isn’t able to make money. Yes, some businesses are going to get caught and some transactions that have positive elements to them will not be able to proceed because the ultimate goal of sanctions is for other individuals to put sufficient pressure on Vladimir Putin so he stops the war in Ukraine.”

In Germany, which depends on Russia for most of its natural gas, the government has disputed Gazprom’s explanation for gas cuts.

“The Russian side’s argument is simply a pretext. It is obviously a strategy to unsettle and drive up prices,” German Economy Minister Robert Habeck said in a statement after the latest cut.

With reports from Reuters

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