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Russia’s Gazprom warns Europe it cannot guarantee future supplies

A view of the business tower Lakhta Centre, the headquarters of Russian gas monopoly Gazprom in St. Petersburg, Russia, on April 27, 2022.Dmitry Lovetsky/The Associated Press

Russia’s state-controlled natural gas producer is warning European customers it cannot guarantee future gas deliveries even after Canada circumvented its own sanctions on Moscow to send a repaired turbine for a key pipeline that ships to Germany.

Critics of Canada’s decision to release the Russian-owned turbine, contrary to its sanctions on Moscow, say this demonstrates how futile it was to bend sanction rules.

“Canada was played for a fool,” NDP foreign affairs critic Heather McPherson said.

Russia’s Gazprom has told customers in Europe it cannot guarantee gas supplies because of ‘extraordinary’ circumstances, according to a letter seen by Reuters, upping the ante in an economic tit-for-tat with the West over Moscow’s invasion of Ukraine.

The July 14 letter from the Russian state gas monopoly said it was retroactively declaring force majeure on supplies dating from June 14.

Known as an ‘act of God’ clause, force majeure is standard in business contracts and spells out extreme circumstances that excuse a party from their legal obligations.

The Ukrainian Canadian Congress (UCC), an advocacy group for Canadians of Ukrainian origin, said Gazprom’s maneuver demonstrates why repairing turbines for Russia will not stop the Kremlin from shutting off gas supplies to Europe.

“Gazprom’s declaration of force majeure regarding Nord Stream 1 is both unsurprising and entirely predictable,” UCC CEO Ihor Michalchyshyn said. “With Canada’s government caving to Russia’s demands, the obvious lesson for the Kremlin is to make ever more demands. As the UCC has previously stated, the Canadian government’s decision to contravene its own sanctions and return the Russian turbines will have wide-ranging repercussions. Russia responds only to strength.”

Canada earlier this month announced it had struck a deal to allow the import, repair and re-export of Russian turbines that help propel gas along the Nord Stream 1 pipeline which serves Germany and other European countries. Prime Minister Justin Trudeau’s government signed an extraordinary permit that allows Siemens Energy in Montreal to service the Russian turbines despite sanctions on Gazprom, the majority owner of Nord Stream.

Mr. Trudeau defended the decision to violate Canada’s sanctions — a move that has angered Ukraine — by saying he did not want Canada to be responsible for interruptions of natural gas to European customers.

Russia last month cited the delayed return of natural-gas turbine equipment, which Siemens Energy had been servicing in Canada, as the reason it decided to reduce the flow of natural gas through Nord Stream 1. The pipeline, which ships gas to Germany from Russia , was cut to 40-percent capacity. It has since been shut down for annual maintenance.

A parliamentary committee is set to soon scrutinize Mr. Trudeau’s decision to let Canada import and repair Russian government-owned turbines for up to two years after members last week voted to call Foreign Affairs Minister Mélanie Joly, Natural Resources Minister Jonathan Wilkinson to explain Canada’s conduct .

Conservative foreign affairs critic Michael Chong said the prime minister “set a dangerous precedent” by agreeing to keep repairing and exporting Russian turbines — an arrangement that appears to have had no effect on gas shipments.

“Canadians and Europeans are now learning that, despite assurances from the Canadian and German governments that circumventing sanctions and returning Russian gas turbines was necessary to keep the gas flowing, Russia’s state-own Gazprom may turn off the gas to Germany anyway,” Mr. Chong said.

He said Canada needs to find a way to export natural gas to Europe as soon as possible.

“The only path forward is for Canada to become a reliable security partner to our European allies by approving and expediting new pipelines and liquified natural gas terminals so that Canadian natural gas can displace Russian energy supplies in Europe – and cut off the money that is funding Putin’s war machine.”

According to a Russian media outlet, the first Nord Stream gas turbine released by Canada has arrived in Europe.

Canada sent a turbine for the Nord Stream gas pipeline to Germany by plane on July 17 after repair work had been completed, Kommersant newspaper reported on Monday, citing people familiar with the situation.

The return of the turbine from Canada to the Russian Portovaya compressor station, a crucial element of Nord Stream, has been in focus for the past month since Russian energy producer Gazprom reduced gas supplies to Germany.

Europe has experienced a reduction in Russian gas supplies amid already soaring energy costs and broader inflation after what Moscow calls a “special military operation” in Ukraine prompted sweeping Western sanctions against Russia.

Nord Stream 1 is currently undergoing planned annual maintenance, which is due to be completed on July 21 and has completely halted flows.

However, there are fears Russia could extend the work period, throwing plans to fill European gas storage for winter into disarray and heightening a crisis that has prompted emergency measures from governments and painfully high bills for consumers.

It will take another five to seven days for the turbine, serviced by Germany’s Siemens Energy to reach Russia if there are no problems with logistics and customs, Kommersant reported.

The daily said the turbine will be sent from Germany by ferry and then transported by land via Helsinki. The equipment is expected to arrive in Russia around July 24, with preparation work taking another three to four days, the paper reported.

Gazprom said on Saturday it expected Siemens to meet its obligations in full when servicing gas turbines needed for the reliable operation of Nord Stream and energy shipments to Europe.

Germany’s economy ministry said on Monday it could not provide details of the turbine’s whereabouts.

But a spokesperson for the ministry said that the turbine was a replacement part that was meant to be used only from September, meaning its absence could not be the real reason for the fall-off in gas flows prior to the maintenance.

Kremlin spokesperson Dmitry Peskov redirected questions to Gazprom. Gazprom and the Russian energy ministry did not respond to requests for comment.

Ukraine’s President Volodymyr Zelensky said he had told Canada’s Prime Minister Justin Trudeau on Sunday that Ukrainians would “never accept” Canada’s decision to return the turbine, saying the move violated sanctions.

More to come.

With files from Reuters

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