Germany Sees Russian Pipeline Part Released in Gas De-Escalation

(Bloomberg) -- Germany expects Canada to release a key Russian pipeline part caught up in sanctions, a move that both Berlin and Moscow have said could ease the squeeze on gas flows to Europe. 

According to a person familiar with the situation, Germany expects Canada to send the turbine back soon. A German government spokesman told reporters on Friday there are “positive signals from Canada,” though he couldn’t confirm the part was on its way yet.

Releasing the turbine could potentially de-escalate the gas standoff between Russia and Germany --and help increase flows that have been drastically curbed for weeks. German Economy Minister Robert Habeck has been pleading with Canada to do so as he tries to avert the prospect of energy rationing in Europe’s largest economy this winter. 

European gas prices fell about 6%.

The Kremlin said on Friday that if the Nord Stream turbine is sent back then gas flows to Europe can increase. The part will first be sent to Germany, and onward to Russia from there, according to a German official.

It wasn’t immediately possible to contact the Canadian government. 

Read: Germany’s Habeck Urges Canada to Help Thwart Putin on Gas

The turbine, built in Canada by Siemens Energy AG, was sent to Montreal for repairs but became stranded due to sanctions on Russia’s oil and gas industry because of its invasion of Ukraine. Habeck proposed the workaround whereby the part would be delivered first to Germany, and from there to Russia. Siemens Energy declined to comment.

Habeck told Bloomberg earlier this week that the turbine for the Nord Stream pipeline needs to be returned before maintenance work begins on Monday. He said that releasing the component would remove an excuse for Russian President Vladimir Putin to keep the conduit closed.

Europe is facing its biggest energy crisis in decades, with prime supplier Russia curbing gas shipments in retaliation over sanctions and Europe’s military support for Ukraine. Russia slashed flows to Germany soon after the part got caught up in sanctions, with Nord Stream only carrying 40% of usual volumes. 

Germany -- which has had to rip up decades of Russian-dependent energy policy since the war -- is now bracing for Moscow to squeeze flows further, and even for the prospect of Nord Stream never to come back online again after maintenance.

Domestic Trouble

Sending the part back could be politically controversial for Prime Minister Justin Trudeau’s government, as the Ukrainian diaspora in Canada is the largest in the world outside of Russia. The Ukrainian community in Canada responded to Habeck’s plea this week with an open letter to Trudeau urging him not to release it.

In an attempt to soothe any potential anger over the decision, Habeck has promised to visit Ukraine with a German business delegation as soon as possible in order to support the rebuilding of the country.

“We fully recognize the suffering of the Ukrainian people that is being caused by Russia, and remain fully committed to supporting Ukraine in its struggle against Russia and in the rebuilding of the country”, Habeck told Bloomberg. “Therefore I plan to travel to Ukraine with a business delegation once it is possible.”

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