Germany Suspects Sabotage to Russia's Nord Stream Gas Pipelines

  • In Business
  • 2022-09-27 11:06:08Z
  • By Bloomberg

(Bloomberg) -- Germany suspects the damage to the Nord Stream pipeline system used to transport Russian gas to Europe was the result of sabotage.

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The evidence points to a violent act, rather than a technical issue, according to a German security official, who asked not to be identified because the matter is being probed. In response to the pipeline leaks in the Baltic Sea, Denmark is tightening security around energy assets.

It's the clearest signal yet that Europe will have to survive this winter without any significant Russian gas flows, as European Union leaders repeatedly accuse Moscow of weaponizing energy supplies.

"It's hard to imagine that these are coincidences," Mette Frederiksen, Denmark's prime minister, told reporters Tuesday. "We can't rule out sabotage."

Kremlin spokesman Dmitry Peskov said that before the results of an investigation, it was "premature" to speculate on whether the damage was related to sabotage.

Germany's Economy Ministry said it was working with the Federal Network Agency to investigate three simultaneous gas leaks in the Baltic Sea from the damaged Nord Stream pipelines. The leaks were so big they were seen on the radars of vessels in the vicinity, the Swedish Coast Guard said.

An investigation by German, Danish and Swedish authorities is difficult because the sites are underwater in the Baltic Sea, the German security official said, adding that a submarine may be required.

Unprecedented Damage

"The destruction that happened within one day at three lines of the Nord Stream pipeline system is unprecedented," the operator of Nord Stream said Tuesday. "It's impossible now to estimate the timeframe for restoring operations of the gas shipment infrastructure."

The pressure drop on Monday at the two lines of Nord Stream and one line of Nord Stream 2 can't impact gas supplies to Europe as the pipelines are idled amid Moscow's invasion of Ukraine. However, markets will be watching for any indications of sabotage.

Benchmark European gas prices climbed as much as 12% on Tuesday, after four days of losses.

"Prices are also trading higher on speculation that this was sabotage, although what that would mean remains highly speculative," said James Huckstepp, head of EMEA gas analytics at S&P Global Commodity Insights. S&P Global Commodity Insights has already assumed that remaining Russian gas flows to Europe will fall to zero before the end of the year, he said.

The Kremlin is likely to keep vital gas flows to Europe at minimal levels as long as the standoff over Ukraine continues, ratcheting up the pressure on the European Union over its tough stance on Russia's invasion, people familiar with the matter said in July. Russia is disrupting gas flows to raise the political heat on European leaders as winter energy shortages loom.

Denmark's energy and climate ministry has registered gas leaks from both Nord Stream and Nord Stream 2 in its exclusive economic zone in the Baltic Sea, and that of Sweden too.

The gas leaks also pose environmental and safety risks. On Monday, the Danish Maritime Authority advised vessels to avoid areas south and southeast of Bornholm island after detecting several gas leaks in the vicinity of the pipelines.

"Leaks of gas pipelines happen extremely rarely, and therefore we raise the level of readiness as a result of the events we have seen over the past 24 hours," Kristoffer Bottzauw, head of the Danish Energy Agency, said in a statement. "We want to monitor thoroughly Denmark's critical infrastructure in order to strengthen the security of supply going forward."

The Swedish Maritime Administration banned vessels from entering an area within five nautical miles of both Nord Stream 1 and Nord Stream 2, citing damage, leakage and "explosive gas in the vicinity."

The Swedish coast guard is monitoring the area by plane.

No Nord Stream leaks have been detected in Finland's exclusive economic zone, Petteri Salli, officer in charge at the Gulf of Finland Coast Guard District, said by phone.

The damage to the pipelines has had no impact on adjacent onshore gas infrastructure in Germany, network operator Gascade said.

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