Russia’s Gas Blackmail

Under Chancellor Angela Merkel, Germany’s dependence on Russia for gas supplies rose as high as 55% in 2020.

The first gas pipeline connecting Germany to the Soviet Union crossed the then Czechoslovak border at Waidhaus. The Transgas pipeline crossed the former Soviet (now Ukraine) border at Uzhhorod (Russian: Ushgorod). Via Ukraine it connects to Belarus and Russia. Even during the cold war it reliably supplied Germany with cheap Soviet gas.

After the breakup of the Soviet Union, its largest successor state Russia has had disputes with several of its ex-Soviet neigbours, including Poland, Ukraine and Belarus. These countries were earning transit fees from gas exported through their territory while also buying some Russian gas for their own use. As long as large consumers in the west were relying on the same pipelines as Russia’s immediate neighbours it wasn’t possible for Russia to halt gas supplies for example to Ukraine as a method of blackmail without jeopardizing long-term lucrative contracts with Western European customers.

That is why Russia came up with the plan to essentially duplicate the existing pipelines through these countries with a more costly set of new pipelines at the bottom of the Baltic sea that went directly from Russia to Germany, without crossing other countries.

The primary purpose of Nord Stream 1 (NS1) and Nord Stream 2 (NS2) was to destabilize the European countries hosting the existing transit pipelines and to expose to Russian energy blackmail. When Germany signed up for NS1 and later NS2, it clearly understood this motivation on Russia’s side but, with active lobbying by ex-Chancellor Gerhard Schröder, it chose to turn a blind eye to the implications. To Germany it was somebody else’s problem.

Well, the chickens have come home to roost: Now it is Germany that is being blackmailed and extorted by Russia while the Baltic states and Poland are already independent from Russian supplies as they have sought out supplies of LNG instead. Germany is still working on making that switch.

On June 13, Russia cut the flow of gas through NS1 by 60%. It blamed this on a turbine at the Russian compressor station in Vyborg (between Finland and St Petersburg) that needed to be refurbished in Canada. The Canadian government was reluctant to return it to Russia because of sanctions.

Eventually a deal was reached between Canada and Germany to return the turbine to Germany, which could then send it to Russia. However, that is not the real story: Germany’s economy minister Robert Habeck made clear that this is just Russia’s excuse and not the actual reason for cutting supplies. Germany can also receive gas from Russia via pipelines that terminate in Mallnow (Yamal-Europe pipeline) and Waidhaus (Transgas). Right now, no gas enters Germany through Mallnow and all the gas that eneters via Waidhaus is fed via NS1 in the north, not Transgas in the east. As separate pipelines, Yamal and Transgas do not depend on the NS1 compressor station and turbine. On top of that there are also multiple turbines at Vyborg, which is why any single one being out of service is no cause for major disruption.

What Russia is doing is to intentionally throttle gas supplies to Germany to prevent it from refilling its gas storage sites. Germany is aiming to fill its storage sites to 90% or more of capacity by November 1 so that it can get through the winter without being subject to Russian blackmail. The less gas it receives now when demand is relatively low the more difficult that goal becomes.

In 2015, a year after Russia seized Crimea from Ukraine, a subsidiary of Russian gas monopoly Gazprom bought Germany’s biggest gas storage site in Rehden near the northern city of Bremen. Rather than fill the site before winter as is usual to insure against supply disruptions, Gazprom has kept this site nearly empty for the past year or so. Normally companies use cheap gas in Summer to fill storage sites to have sufficient gas available when demand is high. Without storage if gas flow through the pipelines is stopped there will be no immediate alternative to keep homes warm and the economy running. Germany has now taken control of the storage site had been steadily refilling it until the recent supply cuts.

Right now gas flow through NS1 is completely suspended for annual servicing but the big question is if supplies will resume after 10 days or if Russia will come up with a different excuse. It is playing mind games with Germany. If Germany can not fill its storage and Russia choses to cut supplies during the winter then this will create political pressure on Germany to do whatever Putin wants it to do. It’s an effort designed to split the Western alliance and to end Germany’s support for Ukraine, which already is somewhat half-hearted compared to eastern NATO members or the United States.

Unlike the former Soviet Union, Russia’s highest priority with gas supplies is not to make money but to project imperial power. Gazprom is part of an empire, not a business. Russia has already sacrificed its position as a reliable energy supplier for political purposes, i.e. an attempt to restore Imperial Russia. There is no going back now. Even if Putin were to lose power, Europe will never again make itself dependent on Russian supplies. It will transition to alternative gas supplies and non-fossil energy as quickly as possible. Russia’s biggest cash cow will soon become worthless, long before gas wells would normally have run dry.

The transition to a non-fossil future may be difficult and expensive, but it is necessary because of climate change and Putin’s blackmail of several countries may end up greatly accelerating it. To get through the transition, Europe needs to work together to maximize alternatives to Russian oil and gas. It must not give in to blackmail.

Leave a Reply

Your email address will not be published.