Russia’s Gazprom warns Europe it cannot guarantee future supplies

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Russia’s state-controlled natural gas producer is warning European customers it cannot guarantee future gas supplies, even after Canada circumvented its own sanctions on Moscow to release a repaired turbine used to ship Russian gas to Germany.

Gazprom last month cited the delayed return of natural-gas turbine equipment, which Siemens Energy had been servicing in Canada, as the reason it decided to reduce the flow of natural gas through Nord Stream 1. The pipeline, which ships gas to Germany from Russia, was cut to 40-per-cent capacity. Nord Stream has since been shut down for annual maintenance.

Critics of Canada’s decision to release the Russian-owned turbine say Gazprom’s warning demonstrates how futile it was for Ottawa to bend sanction rules in the hopes that Moscow would supply more gas in good faith.

“Canada was played for a fool,” NDP foreign affairs critic Heather McPherson said.

Gazprom has told European customers it cannot guarantee gas supplies because of “extraordinary” circumstances, according to a letter seen by Reuters.

The Russian gas slowdown is largely seen as a retaliation for Western sanctions and support for Ukraine against Moscow’s invasion. This latest move ups the ante in this economic tit-for-tat: if gas supplies do not return to normal, European nations may be unable to build stores for winter and energy prices may continue to rise.

Prime Minister Justin Trudeau has defended the decision to violate Canada’s sanctions – a move that has angered Ukraine – by saying he did not want Canada to be responsible for interruptions of natural gas to European customers.

The July 14 letter from the Russian state gas monopoly said it was retroactively declaring force majeure on supplies dating from June 14. Also known as an ‘act of God’ clause, force majeure stipulations are standard in business contracts and spells out extreme circumstances that excuse a party from their legal obligations.

The Ukrainian Canadian Congress (UCC), an advocacy group for Canadians of Ukrainian origin, said Gazprom’s maneuver demonstrates why Mr. Trudeau’s decision will not stop the Kremlin from shutting off gas supplies to Europe.

“Gazprom’s declaration of force majeure regarding Nord Stream 1 is both unsurprising and entirely predictable,” UCC chief executive officer Ihor Michalchyshyn said. “With Canada’s government caving to Russia’s demands, the obvious lesson for the Kremlin is to make ever more demands.”

Canada earlier this month announced it had struck a deal to allow the import, repair and re-export of the turbines. Mr. Trudeau’s government signed an extraordinary permit that allows Siemens Energy in Montreal to service up to six Russian turbines for the next two years – despite sanctions on Gazprom, the majority owner of Nord Stream.

A parliamentary committee is preparing to hold hearings on Mr. Trudeau’s decision after MPs last week voted to call on Foreign Affairs Minister Mélanie Joly and Natural Resources Minister Jonathan Wilkinson to explain Canada’s conduct.

Conservative foreign affairs critic Michael Chong said the Prime Minister “set a dangerous precedent.”

“Canadians and Europeans are now learning that, despite assurances from the Canadian and German governments that circumventing sanctions and returning Russian gas turbines was necessary to keep the gas flowing, Russia’s state-own Gazprom may turn off the gas to Germany anyway,” Mr. Chong said.

He said Canada needs to find a way to export natural gas to Europe as soon as possible.

“The only path forward is for Canada to become a reliable security partner to our European allies by approving and expediting new pipelines and liquefied natural gas terminals so that Canadian natural gas can displace Russian energy supplies in Europe – and cut off the money that is funding Putin’s war machine.”

Added the NDP’s Ms. McPherson: “This to me just seems like proof this was a bad decision to send the turbines back.”

According to a Russian media outlet, the first turbine released by Canada has arrived in Europe.

Canada sent a turbine to Germany by plane on July 17 after repair work had been completed, Kommersant newspaper reported on Monday, citing people familiar with the situation.

There are fears Russia could extend the maintenance period on Nord Stream 1, throwing plans to fill European gas storage for winter into disarray and heightening a crisis that has prompted emergency measures from governments and painfully high bills for consumers.

It will take another five to seven days for the turbine to reach Russia if there are no problems with logistics and customs, Kommersant reported.

The daily said the turbine will be sent from Germany by ferry and then transported by land via Helsinki, Finland. The equipment is expected to arrive in Russia around July 24.

Germany’s economy ministry said on Monday it could not provide details of the turbine’s whereabouts.

But a spokesperson for the ministry said that the turbine was a replacement part that was meant to be used only from September, meaning its absence could not be the real reason for the fall-off in gas flows prior to the maintenance.

With reports from Reuters