Putin hits West with fresh gas shutdown

Russia’s move to cut Europe’s access to gas creates a nightmare scenario for Boris Johnson’s likely successor as British Prime Minister.

Britain's Foreign Secretary Liz Truss has promised no energy rationing if named as Boris Johnson’s replacement as PM, but Russia’s latest move has increased the chance of it happening.

Russia has stepped up its energy war with Europe last night, indefinitely suspending the supply of gas through a key pipeline to the West.

In a move likely to prompt more turmoil in the energy markets, Moscow scrapped today’s deadline for the reopening of the Nord Stream 1 pipeline.

Gazprom, the state company that runs the pipeline, said it had found a fault during maintenance but gave no indication of when the supply would resume.

G7 finance ministers had agreed yesterday to introduce a price cap on oil from Russia in an effort to reduce the country’s revenues, which are used to help fund the war in Ukraine.

Although Britain is not reliant on Nord Stream 1 for its gas, the suspension of the pipeline is likely to push still higher the cost of wholesale gas, which has been behind the spiralling rise in the energy price cap.

The suspension will pile pressure on Liz Truss if she is, as expected, named on Monday as the next prime minister and tries to draw up a cost of living package against the backdrop of worsening government finances.

Experts have warned that a critical winter energy shortage may lead to a breakdown in Europe’s interconnected electricity market — on which the UK relies — as countries try to preserve electricity at times of peak demand.

This may increase the chances of energy rationing, which Truss has committed herself to avoiding.

Nord Stream 1, which runs under the Baltic Sea to supply Germany and other countries, had originally been shut down for three days of planned maintenance, after running at only 20 per cent capacity because of a dispute about a missing turbine. However, Gazprom said the pipeline was unsafe because of an oil leak at a compressor station in Portovaya, near St Petersburg.

A removal van is pictured in Downing Street, the official residence of Britain's Prime Minister, as Boris Johnson prepares to step down next week.

The indefinite closure is likely to renew the turmoil in European gas markets, which had been fairly relaxed about the temporary shutdown after a previous outage ended on schedule. Oil prices had eased back this week in response to signals from Brussels and other capitals that the European Union was open to a price cap.

Gazprom said it had identified the core problem as a gas turbine sent by Siemens, the German engineering firm, to Canada for repairs and then impounded under sanctions. Germany has tried to send the turbine back to Russia but Gazprom said it had failed to provide the necessary paperwork. German officials believe this to be a politically motivated attack on Europe’s energy security, saying that Russia had ignored offers to replace the turbine.

Janis Kluge, a Russia expert at the German Institute for International and Security Affairs, said the move appeared to be a response to rising gas storage in Europe and a revival in Russia’s domestic gas consumption. He suggested it had been timed to land precisely after the end of trading on TTF, the main European gas exchange.

Europe typically depends on Russia for 40 per cent of its gas supplies. Although Britain imported little gas from Russia before the invasion of Ukraine, and has had no deliveries since March, its market is linked by pipeline to the continent and shortages have raised demand for gas from other sources, such as liquified natural gas (LNG) and pipeline imports from Norway, pushing up prices in Britain. Most of Britain’s gas comes from the UK and the Norwegian North Sea, and much of the rest is shipped in as LNG from countries including Qatar and the US.

Ministers from the G7 nations announced on Friday a “joint political intention” to introduce a price cap on Russian oil. However, the level per barrel has yet to be determined and will be based on “a range of technical inputs”.

Officials hope to align the cap with the EU’s effort to ban Russian oil imports into the bloc from December. G7 members want as many nations to sign up to the cap as possible.

Nadhim Zahawi, the chancellor, said: “The UK and our allies have imposed hugely damaging sanctions on the Kremlin war machine, pushing the Russian economy into deep recession.”

- With Callum Jones and Oliver Wright

The Times