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Factbox: Nord Stream’s role in Russia’s gas supply to Europe

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Pipes at the landfall facilities of the ‘Nord Stream 1’ gas pipeline are pictured in Lubmin, Germany, March 8, 2022. REUTERS/Hannibal Hanschke

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LONDON/FRANKFURT, July 18 (Reuters) – Russia’s Gazprom (GAZP.MM) has told customers in Europe it cannot guarantee gas supplies because of ‘extraordinary’ circumstances, according to a letter seen by Reuters, sparking fears over gas supplies to the bloc. read more

The letter has sparked concern among European gas buyers that the force majeure is linked to maintenance this month on the Nord Stream 1 pipeline, a major route carrying gas from Russia to Europe via Germany.

Below outlines the importance of the pipeline in carrying Russian gas to Europe.

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SUPPLY CUT

Even before the planned maintenance began on July 11, Moscow cut Nord Stream’s capacity to just 40%, blaming the late return of equipment held up in Canada because of sanctions.

There are concerns the maintenance will not end on time, with the Italian and Germany governments warning it could be used as a pretext by Moscow to keep sending less gas to Europe. read more

The maintenance is scheduled to end on the morning of July 21.

Russia’s Kommersant newspaper reported on Monday that Canada sent a turbine for the Nord Stream pipeline to Germany by plane on July 17 after repair work had been completed but that it was not expected to arrive in Russia until July 24, after the maintenance is scheduled to end. read more

OWNERS

The pipeline is majority-owned by Gazprom (GAZP.MM) and forms the main route through which Russian gas flows to Germany.

Gazprom has 51% and the rest is held by four Western partners. PEGI/E.ON (EONGn.DE) and Wintershall Dea (WINT.UL)(BASFn.DE) have 15.5% each, and French Engie (ENGIE.PA) and Dutch Gasunie (GSUNI.UL) hold 9% each.

The project partners injected 30% proportionally to their shareholding in equity and received the other 70% in bank and export credit agency loans.

OPERATORS

The Swiss-based Nord Stream AG consortium is the operating company for transit, technical, legal and environmental matters but does not own the asset or the gas in it.

Gazprom Export handles the shipments via contracts with European utilities and gas traders.

IMPORTANCE

There are other major pipelines from Russia to Europe but flows through these have gradually declined.

Flows through Yamal, which historically transported gas from Russia to Europe, have been flowing eastwards, to Poland from Germany since the start of the year.

Flows through pipelines running from Russia to Europe via Ukraine have also decreased after Ukraine halted one gas transit route in May, blaming interference by occupying Russian forces.

IMPACT IF STAYS SHUT

Should Nord Stream 1 not reopen in mid-July, Europe will not have enough gas supply for the peak demand winter months.

European underground storage sites are currently 64% full and the target is 80% by Nov. 1.

Germany’s Focus magazine reported that Uniper had to dip into its gas reserves to fulfil parts of its delivery obligations when Nord Stream flows hit zero as maintenance began. read more

“If Nord Stream 1 were to stop exports completely after the maintenance on 21 July, EU storage levels would reach only around 65% before winter, creating a real risk that the continent could run out of gas during the heating season, adding further upside to the currently elevated market,” analysts at Rystad said.

European gas prices are already at levels three or four times those of a year ago and contributing heavily to inflation and political tensions.

COMPANIES AFFECTED

As a key pipeline for Russian gas transit, many major European gas buyers companies with contracts with Gazprom saw their supplies cut after Nord Stream’s capacity was curbed to 40%. They included Austria’s OMV (OMVV.VI), Italy’s ENI (ENI.MI), Germany’s Uniper (UN01.DE) and RWE (RWEG.DE).

Russia has already cut gas flows to Bulgaria, Finland, Poland, Denmark, Dutch firm Gasterra and Shell (SHEL.L) for its German contracts, after they all rejected a Kremlin demand to switch to payments in roubles.

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Reporting by Susanna Twidale, Vera Eckert and Tom Kaeckenhoff, editing by Barbara Lewis and Susan Fenton

Our Standards: The Thomson Reuters Trust Principles.

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