Germany and its European partners heaved a collective sigh of relief on Thursday as Russia resumed partial gas supplies through a critical pipeline to Europe after a 10-day maintenance period.
Nord Stream 1, which runs under the Baltic Sea between Russia and Germany, had been shut down for repairs, but many in Berlin and Brussels feared it would not come back online after the outage.
However, Nord Stream AG, the operator, said gas was flowing again.
“We are in the process of resuming gas transportation, though it could take a few hours to reach the nominated volumes,” it said on Thursday.
The uncertainty over gas supplies through NS1 had come to symbolise the breakdown in relations between Russia and the west in the aftermath of Moscow’s invasion of Ukraine.
Russia slashed the flow of gas through the pipeline in the four weeks ahead of planned maintenance and Germany accused it of “weaponising” its energy exports to Europe in an attempt to sow panic in the markets and drive up prices.
Though governments in Europe will be relieved that the flow of gas has resumed, early indications are that Nord Stream 1 is still not operating at full capacity.
Klaus Müller, head of Germany’s federal energy regulator, said he expected volumes to be 60 per cent down — just as they were before the maintenance period. “The political uncertainty and the 60 per cent reduction from mid-June remain, unfortunately,” he wrote on Twitter.
James Waddell, an analyst at Energy Aspects, said by resuming partial flows Russian president Vladimir Putin would retain a degree of influence over European capitals this winter and ahead of any potential settlement over the conflict in Ukraine.
“While the post-maintenance increase in flows from Russia will initially be welcomed in Europe this also has the effect of potentially undermining EU solidarity,” Waddell said.
“Russia’s key objective is clearly to stymie Europe’s ability to comfortably fill gas storages ahead of the winter. By restoring partial flows they retain some political leverage over Europe’s capitals while also maximising revenues that help fund the war in Ukraine.”
Data on Nord Stream 1’s website showed 21mn kilowatt hours’ worth of gas flowed through the pipeline between 6am and 7am and 29mn kWh between 7am and 8am on Thursday.
European benchmark gas futures fell almost 8 per cent in early trading on Thursday, with prices at the Dutch TTF hub declining 7.75 per cent to €149 per megawatt hour.
European gas prices have surged over the past year, reaching a record high shortly after Russia launched its attack on Ukraine on February 24. While prices eased this spring, they are still nine times higher than the average over the past five years, and almost double the level they were when Russia started restricting flows on NS1 in June.
Germany is worried that it will be forced to introduce strict rationing of gas for industrial customers if it does not succeed in stocking up ahead of the winter heating season.
The European Commission on Wednesday asked member states to find ways to reduce demand by 15 per cent between August and March, warning the reductions may become mandatory with the potential for further Russian supply cuts.
Economists had warned that if Russia turned off the gas tap, Europe’s largest economy would plunge into recession, though near-record prices still pose a significant threat with inflation at the highest level in decades.
Thomas Rodgers, a gas market analyst at ICIS, said that the market had been broadly expecting the resumption of flows through NS1 to pre-maintenance levels but some traders had been covering themselves for a worst-case scenario of no gas.
“It’s good news for the market having this extra gas in terms of being able to fill up storage ahead of winter,” he added. “It means not having to destroy more industrial demand with high prices.”
State-backed Austrian energy group OMV said Gazprom had confirmed roughly half of its gas order would be filled on Thursday, in line with the volume it was receiving before maintenance started on the line.
Italy’s ENI said it was receiving flows from Gazprom at about half the requested rate, up from less than a third previously.
Russia had cited technical reasons for its decision to reduce the flow of gas through NS1 by 60 per cent from mid-June, a move that prompted Germany to activate the second stage of its gas emergency plan and take a big step closer to the rationing of gas.
Russia blamed the reduction in supply on delays in the return of a Siemens Energy turbine used to pump gas through the pipeline. The turbine had undergone routine maintenance in Canada but Ottawa refused to send it back to Russia, citing its sanctions regime against Moscow.
But Germany said Russia was using the turbine issue only as a pretext to cut supplies. Canada eventually exempted the turbine from its sanctions and gave permission for it to be sent to Germany.
Traders are turning their attention to a warning by Putin on Wednesday that another turbine was due for maintenance on July 26, which could reduce flows through NS1 to 30mn cubic metres per day.