The company “Siemens Energy” for energy services considered that the justification of the Russian gas giant “Gazprom” for stopping the supply of natural gas via the “Nord Stream 1” line is illogical, in strengthening the Europeans’ view that cutting gas through this line for an indefinite period is A political decision to punish Europe, in response to the discussion by the finance ministers of the Group of Seven major industrial countries of the proposal to impose a price ceiling on Russian oil sales.
The Russian company announced that it would not return gas to the pipeline that passes under the waters of the Baltic Sea to Germany, as a result of a leak in it. Pumping was supposed to return in the early hours of Saturday morning after being stopped for three days as a result of emergency maintenance. Last July, pumping across this northern line was halted for 10 days as a result of a previously scheduled maintenance operation. At the time, Gazprom said that five of the eight turbines operating the line needed maintenance, repair and possibly replacement.
The Russian company explained at the time that Western sanctions prevent the maintenance and repair of turbines. Canada was forced to lift a temporary exception of sanctions so that Siemens Energy could transport one of the turbines from Canada, but its delivery was hampered in Europe as a result of sanctions restrictions. Siemens says it has fulfilled its promises, but the Russian company believes that the other four turbines remain a problem due to Western and European sanctions against Moscow, imposed since the start of the war in Ukraine.
oil price ceiling
Gazprom’s announcement to stop pumping natural gas to Europe via Nord Stream 1 for an indefinite period until maintenance and repairs are completed, constitutes a decisive step in the energy war between Russia and the West parallel to the war in Ukraine, and it also comes at a time when Western media is talking about A Ukrainian counterattack on Russian forces benefits from Western support and weapons, which America and Europe have provided Ukraine.
But the decisive factor in that step was the agreement of the finance ministers of the Group of Seven countries on the American proposal, backed by Britain, to work towards imposing a price ceiling on Russian oil to deprive Moscow of revenues from oil sales, which are increasing despite the sanctions, and at the same time the continued flow of oil Russian for the world market.
Since this proposal was put forward, there is almost unanimity in the global energy market that its implementation is not possible for several reasons. First, it requires Russia to comply with this price ceiling. Russia reiterated its announcement that it will not accept this, and renewed its position, Friday, by confirming that it will not sell its oil to any country that adheres to the price ceiling if it is applied.
The second is that the effective implementation of the price ceiling, which deprives Russia of the generous returns from its oil sales, requires the commitment of most of the world’s importing countries of Russian oil to what America, Britain and the West decide. Given that the attempt to get a resolution condemning Russia for the Ukraine war in the UN General Assembly showed that at least half of the world disagrees with the US and Western position, the condition for an effective price ceiling may not be met.
There are also many other factors that make the implementation of the price ceiling, if agreed upon by the major Western countries, extremely difficult. First, in terms of the monitoring and auditing mechanism, even if most countries of the world adhere to it, and it will also open the door to circumventing those sanctions, either through smuggling or through bilateral deals between Russia and countries that do not take an adverse position, such as China, India and others.
In the end, the world cannot afford to lose more than seven million barrels per day, which are Russia’s oil exports, as this may push oil prices to unprecedented levels. Not only that, but a severe global energy crisis may lead to the global economy entering into a depression, perhaps more profound and severe than what it witnessed a century ago.
Therefore, it seems so far that imposing a price ceiling on Russian oil sales with the aim of stifling Russia while its oil continues to flow to support the global economy, is at least difficult to achieve, if not impossible. Even though Russia could not survive without revenues from energy sales, which are the Kremlin’s largest Source of national income.
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Despite the estimates of the International Energy Agency that Europe has reduced its dependence on Russian natural gas by up to 75%, the old continent is still encroaching on that gas, and has not yet been able to compensate for it from other sources. No accurate figures are available on the volume of imports, but it is more likely that the decrease in gas, whether due to the Europeans not contracting with “Gazprom” or as a result of Russia’s pressure on Europe to stop supplies from time to time, does not exceed half.
Although European countries have increased their imports of liquefied natural gas, which is much more expensive than natural gas pumped through pipelines, their imports from the United States and countries in the Middle East are not enough to replace only a small amount of Russian gas.
Until last year, Europe imported nearly half of its natural gas needs from Russia (45 percent), with rates exceeding 132 billion cubic meters of gas. The largest proportion of those imports pass through pipelines linking gas fields in Russia with Europe, amounting to about 12 lines. In addition to a small percentage of shipments of liquefied natural gas by tankers at sea.
Among those pipelines, there are three main lines, the “TransGas” pipeline, which passes through the territories of Ukraine, Slovakia and the Czech Republic, and transports more than 100 million cubic meters of Russian natural gas per day to Europe. The second onshore pipeline is the Yamal-Europe pipeline, which passes through Belarus and Poland to Germany, in addition to the offshore gas pipeline Nord Stream 1 from Russia to Germany directly under the waters of the Baltic Sea. It was supposed to increase the capacity of the lines by operating the new offshore pipeline “Nord Stream 2”, which was suspended due to the war in Ukraine and the sanctions imposed on Moscow.
Those other lines still work, albeit not at their maximum capacity. This has helped to multiply natural gas prices in Europe and Britain by between four and six times in recent months. With winter approaching in the northern hemisphere, and increasing demand for gas and oil for heating and electric power generation to meet seasonal needs, the impact of the Russian decision to halt supplies via Nord Stream 1 could be even more damaging, especially in Europe.
So far, the United States has increased its natural gas exports to Europe to 15 billion cubic metres. If Europe was able to obtain the largest amount of liquefied natural gas, most of which was destined for Asia, what is available is in the range of seven billion cubic meters of Qatari natural gas as an additional production capacity, and about four billion cubic meters from Algeria, Egypt and others. All that extra capacity accounts for only about a third of Europe’s imports of Russian natural gas.
It is also mentioned that the second most important Source of natural gas for Europe after Russia, which is produced by Norway, has recently reached its maximum capacity. Norway is no longer able to increase supplies to the rest of Europe and Britain more than the current situation, which is the highest level in five years. And Norway’s natural gas supplies reached 9.5 billion cubic meters last August, an average of 306 million cubic feet per day.
Europe needs, in addition to the seasonal increase in winter, to fill its reserves of natural gas, which have been depleted more than half in the past months. The European Commission had issued a decision that these stocks in the European Union must be filled by 90 percent before the end of September at least, to avoid a winter crisis that means power cuts and may cause deaths due to the lack of heating.
And in the event the energy war continues and Russia stops more supplies to Europe, many European countries will not be able to fill their stocks, and therefore they will face difficulty in providing for the needs of the winter season, in addition to the fact that even the global spot market is available from high-cost liquefied natural gas, It will not be enough to make up for the discontinued Russian gas.
But the damage will not be on Europe only, but also on the Asian economies, which will lose a share of the gas carried on tankers, which will go to Europe instead of Asia. There is also great damage to the Russian economy, which will mean stopping energy exports to deprive it of a large amount of national income, which will increase the great difficulties it will face as a result of other sanctions.