Berlin under pressure as Ukraine shuts gas pipeline

Kyiv acts amid frustration at slow pace of EU efforts to ditch the Russian fuel bankrolling Putin’s war

GERMANY has been forced to pump in extra gas from Norway and the Netherlands after Ukraine shut a key pipeline bringing Russian fuel to Europe for the first time since Vladimir Putin’s invasion began.

The closure of the Sokhranivka transit hub in the Luhansk region, near Ukraine’s eastern border, caused onward gas flows into Waidhaus, Bavaria, to drop by a quarter, the German authorities said.

Robert Habeck, Germany’s economy minister, insisted yesterday that overall supplies remained “stable”, with the country still getting most of its gas directly from Russia via the Nord Stream 1 pipeline.

But analysts said the disruption was another awkward reminder of Berlin’s continued dependence on Russian energy, piling further pressure on Olaf Scholz, the chancellor, to find alternatives more quickly.

He is already facing a slump in popularity after critics accused him of dithering over sending weapons to Ukraine.

The gas disruption has also created a fresh headache for European Union states generally, which receive one third of their supplies through the Sokhranivka hub.

The move came amid growing frustration in Ukraine at the glacial pace of EU efforts to ditch Russian gas, sales of which are bankrolling Vladimir Putin’s war effort, with the bloc only committing to do so “before 2030”.

In Germany, economists and big businesses have issued apocalyptic warnings that cutting supply “cold turkey” will plunge the country into recession.

Moves to abandon Russian oil have been progressing more quickly, however, with Mario Draghi, the Italian prime minister, revealing yesterday that he had discussed forming a buying cartel with Joe Biden, the US president, to curtail price rises.

But with many EU states still heavily reliant on imports of Russian gas, analysts said the disruption to pipeline flows through Ukraine would focus minds in Berlin and Brussels.

Jack Sharples, a researcher at the Oxford Institute for Energy Studies, said: “We had been very lucky thus far that the war had not interfered with gas supplies transiting through Ukraine to Europe.

“But this puts everyone on notice: these supplies can be disrupted and it could get worse as the fighting gets worse.”

Nathan Piper, an energy analyst at banking group Investec, said long-term disruption to Russian supplies to the EU could threaten plans for member states to fill up their storage sites before next winter. He added: “That would mean everyone is much more exposed to higher prices.”

It remained unclear yesterday whether a specific event triggered the decision by Ukraine’s gas network operator, GTSOU, to suspend flows through the Sokhranivka hub. The Luhansk region has been occupied by Russian forces and separatist fighters since the invasion began in February.

In a statement on Tuesday, GTSOU said it had been forced to declare “force majeure” – meaning its hand had been forced by events beyond its control – because of “direct interference” by Russian forces with its facilities.

The operator accused them of meddling with the system and siphoning off gas without permission, saying it was no longer in control.

A later statement claimed that Gazprom, Russia’s state-owned gas company, was repeatedly warned about the risk to supplies “but these appeals were ignored”.

GTSOU called for Gazprom to instead send supplies via another transit point to the north called Sudzha, in Ukrainian-held territory.

Gazprom initially claimed doing so would be “technically impossible”, although pipeline data showed it began increasing flows through Sudzha just hours later.

Nevertheless, this did not make up for the overall reduction. The Bundesnetzagentur, Germany’s energy regulator, said flows of Russian gas arriving to the country via Ukrainian pipelines had fallen by 25 per cent.

A spokesman added: “These volumes are currently being balanced out by higher volumes from Norway and the Netherlands.

“At the same time, it is true that the largest volumes continue to flow through Nord Stream 1.

“The Bundesnetzagentur is very closely monitoring possible effects for Germany and Europe of the reduction in gas transit flows through Ukraine.”

Some analysts speculated that the decision by Ukraine’s gas operator, which had previously operated facilities in Luhansk despite the occupation, could have a “political motive”.

Caroline Bain, chief commodities economist at Capital Economics, said: “There doesn’t seem to be a technical reason for suspending gas flows – it seems to be more to do with the fact that the facilities are in Russian hands.

“It suggests that both Ukraine and Russia – which has already cut off Poland and Bulgaria – are now prepared to take actions that could affect European gas supplies.”

Ukraine has been urging the EU to stop purchasing Russian gas, even though it earns billions of euros from Gazprom in transit fees.

A long-term closure would leave countries reliant on Russian gas with three options: reduce usage, for example by rationing supply to heavy industry and households; attempt the difficult task of shipping in more gas from other parts in the world to a limited number of terminals at a time of high demand; or give Ukraine more military, financial and diplomatic aid in an effort to persuade it to turn the taps back on.

Draft proposals drawn up in Brussels show that the quest to wean the EU off Russian oil and gas could cost the bloc almost €200 billion (£172 billion) over the next five years, according to the Financial Times.

In Italy, Mr Draghi said he had spoken with Mr Biden about creating a cartel of oil purchasing countries, which could act as a counterweight to the Opec producers’ cartel and help to keep prices down.