Russian energy giant Gazprom has said it will stop natural gas flows to Europe at the end of the month to carry out maintenance work. The key energy pipeline for a host of European nations will remain shut for three days, the Russian state behemoth said.
The announcement has come as a rude shock to European energy customers who have been looking to shore up gas stocks ahead of the start of the winter. The shutdown will be effective from August 31 to September 2.
Germany to be Most Affected
Once the maintenance is complete Gazprom will resume pumping of 33 million cubic metres of gas a day through the pipeline. The Russian monopoly says this is based on the premise that there are no 'technical malfunctions' after the repair. Nord Stream's original capacity is 167 mcm daily.
According to Gazprom, which had shut gas supplies to Europe for ten days in July, it needs to repair the pipeline's only remaining compressor. Germany will be the most affected European nation as the latest disruption will further cripple its supplies. The Nord Stream 1 pipeline runs under the Baltic Sea to Germany, and has been a lifeline for several European nations.
"We are monitoring the situation closely with the Federal Network Agency," a spokesperson for Germany's economy ministry said, according to Reuters.
The Nord Stream pipeline from Russia is running at a fifth of its capacity, underlining the political import Russia attaches to the supply line. While the West accuses Russia of weaponizing gas supplies, Moscow denies the charge, saying sanctions have resulted in the drop in gas supplies to Europe.
Recession Warning
The International Monetary Fund (IMF) said last month that the European Union nations are staring at the possibility of recession as a reduction in Russian gas supplies will severely cripple their economies. According to the IMF, a total shutdown of Russian gas supplies will lead to as much as a 6 percent drop in GDP of the vulnerable EU countries.
"The prospect of an unprecedented total shutoff is fuelling concern about gas shortages, still higher prices, and economic impacts. While policymakers are moving swiftly, they lack a blueprint to manage and minimise impact," IMF said.
The IMF explained that a total shutdown of Russian gas will result in the EU economic growth dropping nearly 3 percent over the next 12 months. There are some countries that will suffer little or no impact on growth. These include Sweden, Denmark and Greece. But countries like Italy will suffer as they have high reliance on gas in electricity production, according to the IMF. While Hungary, Slovakia and the Czech Republic will be the hardest hit, the impact will be severe for Italy, Germany and Austria as well.
