New Russia gas halt tightens energy screws on Europe

Russia halted gas supplies via a major pipeline to Europe on Wednesday, intensifying an economic battle between Moscow and Brussels and raising the prospects of recession and energy rationing in some of the region's richest countries.

The outage for maintenance on Nord Stream 1 means that no gas will flow to Germany between 0100 GMT on Aug. 31 and 0100 GMT on Sept. 3, according to Russian state energy giant Gazprom.

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Data from the Nord Stream 1 operator's website showed flows at zero for 0400-0500 Central European Time (0200-0300 GMT) on Wednesday.

European governments fear Moscow could extend the outage in retaliation for Western sanctions imposed on it after its invasion of Ukraine and have accused Russian President Vladimir Putin of using energy supplies as a "weapon of war". Moscow denies doing this.

The Gazprom logo is seen during the International Gas Forum, at the Expoforum Convention in Saint Petersburg. AFP

Further restrictions to European gas supplies would heighten an energy crunch that has already sent wholesale gas prices soaring over 400% since last August, creating a painful cost-of-living crisis for consumers and businesses and forcing governments to spend billions to ease the burden.

Unlike last month's 10-day maintenance for Nord Stream 1, the upcoming work was announced less than two weeks in advance and is being carried out by Gazprom not Nord Stream AG, focusing on the last operating turbine at the station.

Moscow, which slashed supply via Nord Stream 1 to 40% of capacity in June and to 20% in July, blames maintenance issues and sanctions it says prevent the return and installation of equipment.

Gazprom said the latest shutdown is needed to perform maintenance on the pipeline's only remaining compressor.

Yet Russia has also cut off supply to Bulgaria, Denmark, Finland, the Netherlands and Poland completely, and reduced flows via other pipelines since launching what Moscow calls its "special military operation" in Ukraine.

"Given events over recent months, we think the market may disregard Gazprom's comments and start to consider whether the pipeline may not return to service, or at the very least may (be) delayed for any given reason," said Biraj Borkhataria, Associate Director of European Research at Royal Bank of Canada.

Reuters