Russia cuts flow of gas to Europe, raising fresh doubts about Canada's sanctions waiver

·7 min read
On July 17, 2022, supporters of Ukraine held a rally in Ottawa against the Canadian government’s decision to send repaired parts of a Russian natural gas pipeline back to Germany. (Justin Tang/The Canadian Press - image credit)
On July 17, 2022, supporters of Ukraine held a rally in Ottawa against the Canadian government’s decision to send repaired parts of a Russian natural gas pipeline back to Germany. (Justin Tang/The Canadian Press - image credit)

Russia's Gazprom finally acted on weeks of threats and hints overnight, cutting the already-reduced flow of gas through the Nord Stream One pipeline to just 20 per cent of its full capacity.

The move brought new worries to Germany, Italy and the other European countries that depend heavily on Russian gas piped from Vyborg, Russia to Germany's Baltic coast.

But it also brought new questions for the government of Canada — which issued a controversial sanctions waiver that was supposed to enable Gazprom to restore normal flow to Europe, which had been reduced by about 60 per cent since June.

As of 3 a.m. ET Wednesday, the flow is reduced by 80 per cent — a rate that makes it virtually impossible for European countries that depend on Russian gas to fill their underground storage tanks for winter.

The Kremlin, which controls Gazprom, has been playing with the gas supply to Europe in an effort to weaken sanctions imposed on Russia over its invasion of Ukraine.

Russia has argued that technical issues caused by sanctions were impeding normal deliveries.

The turbine dispute

At the centre of those arguments are half-a-dozen Siemens gas turbines that compress and propel gas through the undersea pipeline. Those turbines normally are removed from service on a regular, rotating schedule and refurbished in the Montreal workshops of Siemens Energy Canada.

But when Canada sanctioned Russia's oil and gas sector, Siemens Energy was blocked from returning one of the turbines to Russia through Germany.

Russia warned that it would reduce the flow unless it got its turbine back. The government of German Chancellor Olaf Scholz asked Canada to make an exception to its sanctions regime to permit the turbine's return.

"We were certainly under a lot of pressure from Germany and the European Union, and on the other side we were under pressure from the Ukrainian government," Natural Resources Minister Jonathan Wilkinson told CBC News on July 11, one day after his government granted a "temporary" and "revocable" sanctions waiver to allow the turbine's return.

The Trudeau government's decision was criticized harshly by Ukrainian President Volodymyr Zelensky and by Ukrainian diaspora organizations in Canada.

Canada not signalling any change to waiver

Ukrainian officials told CBC News today that the cuts to supply proved that the sanctions waiver should not have been granted in the first place.

"This decision of waiving sanctions actually did not have any practical impact on helping the European countries, first of all Germany, to secure their gas supply," said Yulia Kovaliv, Ukraine's ambassador to Canada.

"Instead we see the next steps of Gazprom blackmailing their European consumers."

Kovaliv pointed out that the sanctions waiver was presented as "revocable."

"Gazprom, we believe, took all the steps to provide the evidence that this permission needs to be removed," she told CBC News.

The government of Canada was heavily critical of the latest move by Gazprom.

"The Russian regime and its propaganda arms are clearly creating additional false pretexts to further and deliberately cause energy instability across Europe in an attempt to sow division amongst allies, as it continues to wage its unjustifiable war against Ukraine," Natural Resources Canada spokesperson Keean Nembhard told CBC News.

"We see through their lies. The only thing that would prevent gas from flowing to Europe is (Russian President Vladimir) Putin."

But neither Natural Resources Canada nor Global Affairs Canada responded directly when asked whether the Trudeau government was considering revoking the waiver in response.

Calling the Kremlin's bluff

No one can claim the reductions in flow came as a surprise to the governments of Germany or Canada — both of which have insisted they're not naive about Russia's intentions.

Wilkinson told CBC News after granting the waiver that his government was well aware that Russia was using the turbine as a pretext and might not restore the full flow.

Putin "was saying very publicly that unless the turbines were brought back, it would be our fault that Germany was losing access to Russian gas," the minister said.

"That's not to say that Putin may not shut it down on his own. But it's quite a different circumstance from him being able to say that it was because of Canada's unwillingness to assist our friends in Germany."

WATCH: Natural Resources Minister Jonathan Wilkinson says sanctions waiver 'not a gamble'

German leaders said that their country was determined to call Putin's bluff over the turbine, knowing full well that he could still manipulate the flow based on political calculations.

"We're delivering now in order to keep Russia from having the excuse that we are basically inflicting harm to ourselves," Sabine Sparwasser, Germany's ambassador to Canada, told CBC News.

"In many experts' opinions, it's a pretext, but we take away that pretext. We're delivering the turbine and then we will see whether there is a weaponization of energy by stopping the delivery or not."

Waiver called into question

As currently framed, the waiver would run for two years and allow numerous turbines to be cycled through Canada.

The exact location of the turbine already returned under the sanctions waiver is unclear. Russian media reported on July 18 that it was on its way from Germany to the Russian Portovaya compressor station.

On Tuesday, Kremlin spokesperson Dmitry Peskov claimed that it had still not reached Russia. "We hope that it will happen... sooner rather than later," he said.

"The situation is critically complicated by the restrictions and sanctions, which had been imposed against our country."

Mikhail Klimentyev/The Associated Press
Mikhail Klimentyev/The Associated Press

But Siemens Energy told CBC News that the only obstacle to the turbine entering Russia was the Russian government's own failure to provide an import permit.

"The German authorities provided Siemens Energy with all the necessary documents for the export of the turbine to Russia at the beginning of last week. Gazprom is aware of this," a Siemens spokesperson said. "What is missing, however, are the customs documents for import to Russia. Gazprom, as the customer, is required to provide those."

Germany's nuclear option

Germany has faced heavy criticism since the Ukraine war began for allowing itself to become dependent on Russian energy (against the warnings of allies) and for deepening its energy problems by choosing to close its nuclear power plants — a long-standing goal of governing coalition member the Green Party.

That decision required Germany to replace low-carbon nuclear with lignite, the dirtiest and most carbon-intensive form of coal. It also deepened its dependence on Russian energy.

Wilkinson defended Germany's right to shut down functioning capacity even as it asked Canada for a sanctions waiver because of feared shortages.

But today, Germany's energy inspector told the Bild newspaper that Germany is looking at cancelling the proposed closure of three nuclear plants this December and may also reopen plants that were already closed.

Martin Meissner/Associated Press
Martin Meissner/Associated Press

Ukraine makes a new offer

Ukrainian officials told CBC News they have made a new offer to the EU to supply it with electricity.

The power would come from Ukraine's own nuclear, hydro and renewable generating capacity — in spite of the difficult wartime conditions Ukraine faces that include the occupation by Russian troops of its Zaporizhia nuclear plant, Europe's largest.

The electricity on offer, Ukraine said, would be equivalent to five billion cubic metres of natural gas and would help Germany and its western European neighbours reduce their dependency on Russia.

Olga Bielkova speaks for Ukraine's state gas company. She said the overnight reductions in Nord Stream are "not a surprise at all."

"I would want to say I told you so, but I was trained not to say so."

Bielkova said that reporting on western and central European energy woes often overlooks the catastrophic energy situation that Ukraine itself faces.

Before the war, Ukraine was one of Europe's largest producers of natural gas, pumping out 20 billion cubic metres per year. But it has seen pipelines damaged, its facilities attacked, a large part of its territory occupied and much of its industrial base destroyed.

Bielkova said it is time for European nations to face a reality that Ukraine has already accepted.

"It is very probable that at some point they will put us all in a very difficult situation by stopping this supply, regardless of which routes, be it Nord Stream One, the Ukrainian route, or TurkStream. And Europe as the largest consumer of Russian gas should exercise some power as a customer."

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