One of the biggest concerns surrounding Russia’s invasion of Ukraine has been the fallout from sanctions placed on the aggressor. Now the time has come to determine if Europe can effectively wean itself from Russian fuel sources.
On Monday, July 11, the Russian Nord Stream 1 pipeline was shut down for a 10-day maintenance period. Per the NY Times, there is a certain degree of uncertainty regarding how long these repairs will take. The Nord is an essential underwater pipeline that supplies natural gas to Germany, Austria, Italy, and the Czech Republic. Despite the sanctions placed on Moscow, Germany still sources thirty percent of its natural gas from Russia to fuel its industrial sector.
Gazprom, a Russian energy titan, is the majority shareholder of the pipeline. Last month, the company reduced the supply of natural gas by sixty percent, resulting in prices spiking to record highs. This cutback prompted Germany to raise its alert level to the second of three stages when a gas emergency occurs. The third stage of this system would allow the government to implement gas rationing and pass laws to assist utility companies by reactivating coal-fueled power plants.
In Berlin, officials are concerned that Gazprom might use the “routine maintenance” to their advantage and cut off Europe entirely. This would trigger Germany’s plan to fill national gas reserves by no later than November to ensure a full supply for winter. At present, storage facilities across the country are approximately 63 percent full. Yet, if Russia shuts off the Nord Stream pipeline beyond the 10-day maintenance window, that goal could be unattainable.
German economic minister Robert Habeck discussed the severity of this possibility on Monday when he stated, “It is a situation we have not encountered before.” Also, on Monday, Chancellor Olaf Scholz met with the heads of major companies to discuss the impact of the war and its sanctions on Germany’s economy. Already faced with soaring energy costs and still struggling with disruptions from the pandemic, a total cutoff of natural gas could send Germany, Europe’s economic powerhouse, into a recession.