Looming Energy Crisis: Germany, US Sanctions, and Russian Gas

July 22nd, 2022 - by Bernhard Horstmann / Moon of Alabama

Nord Stream 2 Must Be Opened

Steven Starr

(July 21, 2022) — Germany is facing an existential crisis because it has gone along with the US-driven sanctions regime against Russia. As a consequence, Germany faces economic collapse, as well as a winter without enough natural gas to keep its people warm.

German industries have come to be dependent upon relatively cheap Russian natural gas; they cannot remain competitive with dramatically higher gas prices, and cannot remain open if there is no gas to be had. It is clear that Germany will NOT have enough gas reserves to make it through the coming winter; its factories will close and its people will be freezing in unheated homes if the current economic policies — massive sanctions against Russia — remain in place.

This German author, who publishes the Moon of Alabama blog, explains the situation and calls on his readers to take action.

Why Nord Stream II Must Be Opened Immediately

Bernhard Horstmann / Moon of Alabama

(July 21, 2022) — Next winter Germany, and other European countries, will have an energy crisis. This crisis, we are told, is caused by the proxy war between the US and Russia in Europe. They say that Russia has cut us off from its natural gas deliveries.

That is a lie.

The Ukraine and Poland have shut off some pipelines that bring in gas from Russia to Western Europe. Germany has not delivered on the contracted maintenance that is required to keep the Nord Stream I pipeline at full capacity. The German government has blocked the certification of the Nord Stream II pipeline, which is technically 100% ready to work at full capacity.

The energy crisis Europe will experience was created by the governments of those European countries who stop the pipeline flow of gas from Russia and who’s citizens will have to bear the consequences.

It is solely on them to stop that coming catastrophe.

Vladimir Putin’s Argument

Here is how one man, known for his attention to details, correctly portrays the issue:

Question: Mr. President, a serious energy crisis is developing in Europe, which is discussing the possibility of Gazprom cutting off gas deliveries. The company has allegedly issued an official notification to one of its German clients, citing force majeure circumstances.

Are there grounds for accusing Russia of causing this energy crisis? Will Gazprom continue to honor its obligations

Vladimir PutinFirst of all, Gazprom has always honored, and will continue to honour its commitments. There are no grounds at all for the attempts by our partners to shift or try to shift the blame for their own mistakes on Russia and Gazprom.

What is the situation with energy deliveries? In 2020, in the first half of 2020, gas cost 100 euros per 1,000 cubic metres in Europe. The price rose to 250 euros in the first half of 2021. Today it is 1,700 euros per 1,000 cubic metres of gas.

What is happening? I have spoken about this on numerous occasions, and I do not know if we should go into detail regarding the energy policies of European countries, which underrate the importance of traditional sources of energy and have put money on non-traditional energy sources. They are big experts on non-traditional relations, and they have also decided to make a bid for non-traditional energy sources like the sun and wind.

Last winter was long, there was no wind, and that did it. Investment in the fixed assets of traditional energy producers has decreased because of previous political decisions: banks do not finance them, insurance companies do not insure them, local governments do not allocate land plots for new projects, and pipeline and other forms of transportation are not developing. This is a result of many years, probably a decade of this policy. This is the root cause of price hikes rather than any actions by Russia or Gazprom.

What is going on today? Until recently, we supplied gas to Europe without Turkiye: we supplied around 30 billion cubic metres a year to Turkiye, and 170 billion to Europe, 55 billion via Nord Stream 1, and, if memory serves me, 33 billion were supplied via Yamal-Europe, via the two strings that run through Ukraine. About 12 billion were delivered to Europe through Turkiye via TurkStream.

Ukraine suddenly announced that it was going to close one of the two routes on its territory. Allegedly because the gas pumping station is not under its control but on the territory of the Lugansk People’s Republic. But it found itself under the control of the Lugansk People’s Republic several months before, and they closed it just recently without any grounds. Everything was functioning normally there, no one interfered. In my opinion, they closed it simply for political reasons.

What happened next? Poland imposed sanctions on Yamal-Europe, which supplied 33 billion cubic metres of gas. They used to take 34, I think, 33–34 million cubic metres a day from us. They shut it down completely. But then we saw that they turned on the Yamal-Europe pipeline in reverse mode, and they started taking about 32 million a day from Germany.

Where is the gas from Germany coming from? It is our Russian gas. Why from Germany? Because it turned out to be cheaper for the Poles. They used to get it from us at a very high price, closer to the market price, whereas Germany gets it from us 3–4 times cheaper than the market price under long-term contracts.

It is profitable for German companies to sell it to the Poles at a small premium. It is profitable for the Poles to buy it because it is cheaper than to buy it directly from us. But the volume of gas in the European market has decreased, and the total market price has gone up. Who has won? All Europeans only lost. This is the second point: Yamal-Europe.

So, first one of the routes in Ukraine was shut down, then Yamal-Europe was shut down, now Nord Stream 1, which is one of the main routes — we pump 55 billion cubic metres a year through it. There are five Siemens gas compressor stations working there, and one is on standby. One compressor had to be sent out for repairs.

A repaired compressor was supposed to come from Canada, from the Siemens plant in Canada, to replace it. But it ended up under sanctions in Canada. So, one pumping station, just one piece of equipment was out of order because of scheduled maintenance work and it has not been returned from Canada.

Now we are being told that the unit will be delivered from Canada soon, but Gazprom does not have any official documents yet. We must certainly obtain them, because this is our property, it is the property of Gazprom. Gazprom should receive not only the hardware, not only the gas pumping unit, but also the accompanying documents, both legal and technical documentation. We must be able to see what Gazprom is taking — the turbine’s current condition as well as its legal status, whether it is under sanctions or not, what we can do with it, or maybe they are taking it back tomorrow. But that is not all.

The problem is that at the end of July, on July 26, I think — we can ask Gazprom — another turbine should be sent for routine maintenance, for repairs. And where will we get a replacement from? We do not know.

One more turbine is actually out of order because of some crumbling of its internal liner. Siemens has confirmed this. That leaves two operational units, which are pumping 60 million per day. So, if one more is delivered, fine, we will have two in operation. But if it is not, only one will be left, and it will pump only 30 million cubic meters per day. You can count how much time it will take to pump the rest.

How is this Gazprom’s responsibility? What does Gazprom even have to do with this? They have cut off one route, then another, and sanctioned this gas pumping equipment. Gazprom is ready to pump as much gas as necessary. But they have shut everything down.

And they have fallen into the same trap with the import of oil and petroleum products. We hear all sorts of crazy ideas about capping the volume of Russian oil imports or the price of Russian oil. This is going to lead to the same situation as with gas. The result (I am surprised to hear people with university degrees saying this) will be the same — rising prices. Oil prices will spiral.

As for gas, there is another route we are ready to open, which is Nord Stream 2. It is ready to be launched, but they are not launching it. There are problems here as well, I discussed them with the Chancellor about six or maybe eight weeks ago. I raised this issue; I said that Gazprom had reserved the capacity, and that this capacity needed to be used, and it cannot be suspended in mid-air indefinitely.

The answer was that there were other issues on the agenda, more important things, so it is difficult for them to deal with this right now. But I had to warn them that then we would have to redirect half of the volume intended for Nord Stream for domestic consumption and processing.

I raised this issue at the request of Gazprom, and Gazprom has actually already done it. Therefore, even if we launch Nord Stream 2 tomorrow, it will not pump 55 billion cubic meters, but exactly half that amount. And given that we are already halfway through this year, it would be just a quarter. Such is the supply situation.

But — I said this at the beginning of my answer to your question and I want to end with this — Gazprom has always fulfilled and will always fulfil all of its obligations, as long as, of course, anyone needs it. First, they themselves close everything, and then they look for someone to blame — it would be comical if it were not so sad.

Those are facts.

The German and other European governments have pledged to suicide the German economy and the wealth of their citizens solely out of spite over the Russian government’s action in the Ukraine. They deny that it is THEIR action that is causing the crisis.

Here is a neutral source, an Indian diplomat, explaining the basics of the business to the dimwits who are ruling over Europe: Russia teaches Europe ABC of gas trade

They, and their media, ignore that Russia has had, and has, sound reasons to defend the Donbas republics. They do not tell you that the Ukraine, in late February, had planned and was ready to attack the citizens of Donetzk and Luhansk with overwhelming force.

Here is additional evidence for that:
OSCE Reports Reveal Ukraine Started Shelling The Donbas Nine Days Before Russia’s ‘Special Military Operation’

They deny that Ukraine is controlled by extreme right-wing elements. They deny that there are full-fledged Nazis formations in control of Ukraine even as their own media have for years warned of those.

They are lying to you.

All German natural gas storage sites can be filled to the brim via Nord Stream II if the Germany government would allow for it. It does not do so. That is the reason why you in Europe will to have pay much more for heating and electricity in the months and years to come.

Russia will win the war. It is only a question of time. Meanwhile, the sanctions will impoverish Europe:

[C]an the European public wait? Before the sanctions have a “desired effect,” it is the ordinary people that will suffer. Russia’s economy is still standing, but the crisis has cast a long shadow over European economies. Leaders of EU countries face low growth and record inflation. The euro is at parity with the dollar. According to a Bloomberg report, the European Commission is set to warn that a halt of Russian gas supplies to the EU could potentially reduce its GDP by as much as 1.5 percent.

The EU is well in a position to find out that it is not that Russia cannot live without Europe, but Europe cannot live without Russia. EU’s sanctions against Russia serve as a boomerang. After all, it is the European public that is paying the price for the decision of policymakers.

European politicians talk in high spirits about what kinds of sanctions would hurt Russia most and that aligning with the US makes them more secure. But when the public has no gas to even take a shower or cannot buy oil and flour at the supermarket, what is the meaning of the “security” the European politicians tout?

It is on you to expose the politicians behind these sanctions and to force them to change course. Your well-being depends on that.

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