Russia’s state-owned energy company Gazprom on Friday shut down Nord Stream 1, a major pipeline supplying gas to Europe, after months of tensions over the war in Ukraine, without indicating a date for resumption of flow. . Mint takes a look at development and its impact.
What is Nord Stream 1? How does it matter?
Nord Stream 1 refers to a pair of pipelines carrying natural gas from Russia to Europe. The pipeline, which became operational in 2011 and 2012 respectively and runs under the Baltic Sea, supplies the equivalent of a third of the EU’s natural gas imports from Russia. Last year, about 40% of the EU’s natural gas imports came from Russia. While Russia has cited technical difficulties for the shutdown, European leaders have cried out accusing Moscow of weaponizing energy supplies. European gas prices jumped sharply on Monday following Gazprom’s announcement.
What is the latest controversy about?
Since the Russian invasion of Ukraine in February this year, the Nord Stream 1 pipeline has been in the spotlight. In June, Russia reduced supplies to 40% of the pipeline’s capacity before shutting down Nord Stream 1 for a short period. While the pipeline resumed, supplies were reduced to 20% of capacity. With the latest shutdown announced on Friday, European officials and leaders have taken a dim view of Russia’s actions. Matters were still unclear as Russia’s move came shortly after a meeting of G7 finance ministers, where the major powers agreed to limit the price of Russian oil.
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What was Europe’s reaction to the closure of Nord Stream 1?
European Commission chief spokesman Eric Mammer tweeted that Gazprom’s Nord Stream 1 shutdown is another confirmation of its unreliability as a supplier “under the misleading pretense”. European Council President Charles Michel made a derogatory remark. “The use of gas as a weapon will not change the EU’s resolve,” he said.
What is the effect on European countries?
The latest development comes on top of energy prices that are already high. Some countries, such as Germany, have rushed to set up natural gas terminals, diversify import sources, and fill storage. ICRA Vice President and Group Head Prashant Vashisht says Europe is looking at nuclear power as well as thermal power. In an effort to contain the crisis, energy ministers from across Europe are expected to meet on 9 September to coordinate their response to high energy prices.
Will India be affected by these developments?
The closure will raise both gas and crude oil prices, as European countries are expected to move to oil amid low gas availability. India imports about 85% of its energy requirement, and global disruption could keep energy markets tight. This means that India’s spot purchases of natural gas may decline. A rise in the price of gas, a major feedstock in fertilizer production and fuel for power generation and other industrial sectors, will raise operating costs in these industries.
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