The Russian Federation has signaled it is unlikely that deliveries of natural gas through the Nord Stream 1 pipeline will be returned to Europe in time for the completion of scheduled maintenance, which commenced July 11 and was to resolve by July 21.
The development, if it should come to fruition, is expected to send monstrous shockwaves throughout the European economy to the extent that some analysts have dubbed the situation a looming “doomsday” scenario.
In a June 18 exclusive released by Reuters, the outlet says it viewed the contents of a letter sent by Russia’s state-owned Gazprom, which is the majority controller of the Nord Stream twin pipelines, to four major buyers declaring force majeure, aka “Act of God.”
The invocation of a force majeure clause informs the buyers, among which are two of Germany’s largest utilities providers, that for reasons beyond their control, Gazprom will not be fulfilling deliveries scheduled under the existing contract.
The letter, dated July 14, seems to surround a controversy involving the release of a critical Nord Stream turbine being repaired by Siemens at its Montreal facility.
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The part is critical for scheduled maintenance to be completed, but because of geopolitical tensions surrounding the Russia-Ukraine war and the Justin Trudeau Administration’s positioning of Canada in the globalist empire, the release of the part amid economic sanctions has been cast in doubt.
Despite the fact that on July 10 the Government of Canada announced it would issue a special permit to Siemens to release the turbine, Gazprom nonetheless insisted on July 13 that no delivery of the part had actually been scheduled.
Trudeau took tremendous heat from the Canadian and international press after making the announcement, which on its face, appears to acquiesce to Russian President Vladimir Putin.
Trudeau is in an extra bind because the Siemens facility is located in Montreal, where his parliamentary riding is seated.
Canada’s establishment-left Globe and Mail revealed in a July 13 article that the administration had granted Siemens a two year exception to Russian sanctions, allowing for the import and export of up to six units.
Trevor Sikorski, Head of Natural Gas, Coal, and Carbon at Energy Aspects Ltd. explained to Bloomberg in a July 18 piece that triggering force majeure in this situation is “unusual to say the least.”
A former trader and head of an advisory firm, Jean-Christian Heintz, explained to the outlet in more detail, “This move may sound quite odd, because first of all a force majeure event declared by a seller is supposed to be beyond the seller’s control, which is arguable given the level of weaponization of the gas since the start of the conflict.”
“And secondly, the [force majeure] should be addressed by mitigation efforts, which are not too obvious at this stage.”
Reuters noted in a second article also dated July 18 that Russian media outlet Kommersant had publicized that Canada had released the turbine on July 17 and it was now en route.
The article stated that the component was scheduled to land in Germany before being transported by ground to Helsinki and would take between 5 and 7 days.
This announcement, however, appears to confirm that the July 21 deadline is not going to be met.
An anticipated date for the turbine’s arrival was July 24, with an additional 3 to 4 days of preparation work in advance of installation being required, assuming no problems were to be found with the part.
The story gets more complicated because a spokesperson for Germany’s Ministry of Economy was paraphrased as stating that “the turbine was a replacement part that was meant to be used only from September.”
The implication being “its absence could not be the real reason for the fall-off in gas flows prior to the maintenance.”
Russia had reduced flow through Nord Stream 1 by 40 percent in mid-June, citing the absence of the turbine as the cause.
While the doomsday scenario hypothesized by entities as large as UBS AG to cause an instantaneous 20 percent dump in Germany’s Stoxx 600 index and an overnight 10 percent devaluation in the already cratered Eurodollar may be overstated, the impact is bound to be significant.
Bloomberg’s article cited a “draft EU document” penned by the European Commission and viewed by the outlet that stated the impact of Nord Stream 1 remaining offline would amount to a reduction of as much as 1.5 percent of the EU’s GDP if Europe has a cold winter.
Data published to Twitter by one analyst showed that Germany’s natural gas reserves had already stopped growing a few days in advance of Nord Stream’s scheduled maintenance.
In another piece of data, German utility giant Uniper’s stock value has been absolutely wiped out amid the energy crisis, falling from over 40 Euros per share in February to a previous week’s low of 8.78.
The reason appears to be that Germany’s legislation caps the price of natural gas for delivery to customers at a time that the market price has skyrocketed.
Already on July 8, Uniper filed paperwork with the government appealing for a bailout.
A CNBC article at the time explained that Uniper has been hit exceptionally hard by the Nord Stream shutdown, already receiving only 40 percent of its scheduled deliveries, which means the company has had to purchase gas at a much higher price elsewhere and eat the loss.
July 18 reporting by Bloomberg stated that Uniper had called on federalized lender KfW for an expansion of its 2 billion Euro line of credit.
The company is parented by a Finnish company, Fortum Oyj, partially owned by the government, which has already extended an 8 billion Euro credit facility to Uniper.
Bloomberg said that bailout talks with the German government “have been tense.”
An additional same day article by Bloomberg revealed that the combined debt owned by all of Europe’s power firms now exceeds 1.7 trillion Euros, a figure 50 percent higher than the pre-COVID era, amid the continent’s remarkable energy crisis.
