Gas flows resume on Nord Stream pipeline but remain below capacity

LONDON (ICIS)–Flows resumed on Thursday along the Nord Stream natural gas pipeline between Russia and Europe, but the volume of deliveries remains significantly below capacity.

Running between Russia and Germany, the pipeline is a key part of the EU’s energy infrastructure, and there had been questions over whether gas deliveries would resume once work had been completed.

Pipeline operator Nord Stream AG – a joint venture between Gazprom, BASF’s Wintershall Dea business, Gasunie and Engie – confirmed on Thursday that work had been completed and gas transmission has resumed.

“Nord Stream AG has successfully completed all planned maintenance works on its twin gas pipelines within the scheduled period. Gas transmission resumed on 21 July,” the firm said in a statement.

While fears that the Russian government will ultimately cut off all gas deliveries to Europe as a result of tensions arising from the war in Ukraine have failed so far to materialise, current gas volumes remain low.

Gas nominations from Gazprom started at 530 gigawatt hours per day (GWh/day), according to Klaus Muller, president of German energy regulator the Federal Network Agency, and are expected to reach 40% (700/GWh/day).

This would be similar to the volumes delivered before the maintenance work, but substantially below delivery levels prior to Gazprom moving to throttle sales to western Europe last month.

“Unfortunately, the political uncertainty and the 60% cut from mid-June remain,” Muller said.

The European Commission – the EU’s executive body – had been understood to be bracing for deliveries from Russia not to resume at all, and published guidance on Wednesday pointing to potential for significant supply reductions to industrial players in the region.

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The resumption of deliveries may provide some relief to EU producers and policymakers, but steady low-volume supplies could stand to maintain European reliance on Russian stocks, instead of making bolder moves towards finding new solutions, according to ICIS senior energy markets reporter Aura Sabadus.

“Mindful of the ongoing stand-off with Europe over the war in Ukraine, some companies expect Russia to cut supplies completely, but others expect Russia to continue to supply gas at minimal levels, which could inflict more harm than outright curtailment,” she said.

“That move would prevent European companies from mobilising resources at short notice in preparation of winter, while allowing Gazprom to continue to profit from high prices in a tight demand environment. Secondly, Russia’s gas supplies to Europe also allow it to use it as a lever in extracting concessions and sow division among western partners,” she added.

With the volume of deliveries remaining low, diversifying away from Russian stocks is not likely to be sufficient to build up necessary stocks for the winter heating season, the International Energy Agency (IEA) said this week, assuming an early October cut-off to volumes from Gazprom.

The EU is likely to need to save 12bn cubic metres of natural gas to reach 90% of stockpile capacity by October, the start of the heating season, according to IEA estimates, with additional non-Russian gas volumes not available in the quantity needed.

The EU should incentivise auction platforms and increase co-ordination to incentivise EU industrial players to reduce gas demand, IEA executive director Fatih Birol said this week, and to enhance co-ordination between gas and electricity operators across the continent to reduce the impact of lower gas use on power systems.

Focus article by Tom Brown