Russia accused of 'psychological warfare' after turning off gas supply

Is this just the beginning? Russia accused of ‘psychological warfare’ after turning off Nord Stream gas supply pipeline to Europe following discovery of ‘oil leak’ – as experts say it could be easily fixed

  • Russian energy giant Gazprom cut off its Nord Stream 1 pipeline after the G7 agreed a ‘price cap’ on its energy
  • An ‘oil leak’ was discovered within a turbine in St Petersburg – but experts say this could be easily repaired 
  • Russia has hinted there could be further disruption to come, sparking fears that this is only the beginning
  • Vladimir Putin was accused by Germany of using energy as a ‘weapon’ against the continent amid Ukraine war

The end of Europe’s use of Russian energy could be looming after Vladimir Putin last night sparked a fresh energy war with the West by keeping a key gas pipeline offline – blaming an ‘oil leak’ which experts say could be easily fixed.

Russia’s Nord Stream 1 pipeline, which runs to Germany under the Baltic Sea, was due to reopen today after planned ‘maintenance’ works left it out of action for three days.

But after the G7 agreed an oil price cap on Russian energy in further sanctions on the country, Moscow announced in a shock move last night that the pipeline would not be reopening.

Gazprom, the state-controlled energy firm which controls gas exports, said it had found ‘oil leaks’ in a turbine in St Petersburg, meaning the supply of Russian gas would remain turned off ‘indefinitely’.

But energy experts from Siemens Energy, which normally services Nord Stream 1 turbines, has slammed Russia’s claims and says an oil leak would not prevent the pipeline from reopening, leading to allegations of ‘psychological warfare’.

‘Such leaks do not normally affect the operation of a turbine and can be sealed on site. It is a routine procedure within the scope of maintenance work,’ the company said. 

Michael Roth, chairman of the German parliament’s foreign affairs committee, said last night: ‘This is part of Russia’s psychological warfare against us.’

This followed Kremlin spokesman Dmitry Peskov had suggested there could be more disruptions to deliveries via Nord Stream, sparking fears this may only be the beginning in Russian moves which could further increase energy prices.

Meanwhile there are fears Europe will become hugely reliant on China to meet its energy demands if Russian gas and oil are switched off completely. 

The Kremlin has hinted this could be just the beginning of disruption to Russia’s energy supply to Europe, as Ukraine steps in to assist Germany

The news came hours after G7 leaders agreed to impose price caps on Russian oil in a bid to curtail Putin’s coffers as he continues to wage war in Ukraine. The Kremlin immediately responded to say it would halt the sale of oil to any countries that imposed restrictions

Gazprom said on Friday that all natural gas supplies via Nord Stream 1 would remain cut off after an apparent oil leak within the main turbine at Portovaya compressor station, near St Petersburg, was discovered

Doomsday forecasts are now predicting hard-up Brits could fork out more than £104-a-week just to heat and power their homes from spring 2023

Russia is the world’s second largest oil exporter after Saudi Arabia and the world’s largest exporter of natural gas. Pictured: Nord Stream 1 in Lubmin, Germany 

Britain faces 22% inflation by January as energy giants are predicted to rake in £17BN EXTRA profits 

Britain faces an inflation rate of 22 per cent this winter leaving millions unable to pay the bills and businesses going to the wall while energy firms are predicted to make £170billion extra in profits.

Goldman Sachs predicts inflation will double in 2023 as the price cap on energy bills continues to rise pushed up by soaring gas prices with the rising cost of food and a weak pound also contributing to the crisis that is sending the UK towards recession.

It came as leaked Treasury forecasts, published by Bloomberg, revealed the spiraling crisis will massively profit energy giants as oil and gas producers are predicted to make an extra £170billion as families face the choice between eating and heating this winter because of the cost of crisis catastrophe. 

Pubs across the country that have been open for more than 200 years are closing their doors as their bills soar, with one heartbroken landlord admitting that they would have had to charge £14-a-pint and £40 for a main course to remain solvent.

The predictions of £170billion profits for energy firms will be delivered by Treasury officials to the next Prime Minister on September 6, putting pressure on them to impose another windfall tax to ease the energy crisis this winter.

A tax at the current windfall rate of 25 per cent would bring in billions of pounds for the Treasury to help give assistance to households through the cost of living crisis. 

But the likely winner of the Conservative leadership contest Liz Truss has said repeatedly she is against new taxes and instead wants to cut tax in an effort to create economic growth. 

Ms Truss has insisted that a windfall tax on energy giants massive profits would ‘send the wrong message to investors’. 

In a warning about what she faces if she beats Rishi Sunak, one insider said today: ‘This makes Covid-19 look relatively straightforward’.

Germany has been one of the leading nations in its fierce reaction to Putin’s invasion of Ukraine, and was one of the G7 nations which agreed to penalise firms who help Russia by selling gas above the price cap they have set.  

Britain, the US, Canada, France, Italy, Germany and Japan – the countries that make up the G7 – said they would bar insurance for tankers or shipping companies helping Russia in this way.

Since Moscow’s announcement, German newspapers are reporting that Ukrainian President Zelensky has offered to sell its nuclear power to Germany in an effort to decrease the impact a lack of Russian energy would have.

Ukraine already exports between 400 and 700 megawatts of energy a day to eastern European countries such as Poland, Romania and Moldova.

Prime Minister Denys Shmyhal spoke out about Ukraine’s plans this morning: ‘Ukraine currently exports its energy to Moldova, Romania, Slovakia and Poland.

‘But we are absolutely prepared to expand our exports to Germany. We have a sufficient supply of in Ukraine thanks to our nuclear power stations.

‘During my visit to Berlin and then Brussels I will pledge this.’

Mr Shmyhal is expected to arrive in Berlin today before meeting with Germany’s President, Olaf Scholz, tomorrow. 

The possibility of a prolonged halt of natural gas supply will cause further difficulties in European countries scrambling to build up gas storage and cut back usage ahead of winter. Britain has moved to shore up energy supplies by putting coal-fired power stations on standby and taking steps to reopen a major gas storage facility.

Gazprom has already reduced flows through Nord Stream over the summer, accelerating a surge in wholesale gas prices.

The sale of oil and gas – which adds an estimated £700 million a day to Kremlin coffers – is being used by Russia to bankroll the bloodshed in Ukraine.

The timing of this extended shutdown sparked concern in Brussels that Putin is exploiting Europe’s reliance on Russian fossil fuels.

European Commission president Ursula von der Leyen’s official spokesman said Gazprom’s move ‘under fallacious pretences is another confirmation of its unreliability as a supplier’.

Cuts to supplies via Nord Stream have left countries scrambling to refill storage tanks for winter amid fears of possible blackouts later this year. Moscow has already drastically slashed the amount of gas supplied to Europe.

It is the second time Nord Stream has been closed since Putin’s invasion of Ukraine.

‘The coincidence between this announcement and the G7 price cap will fuel concerns in the West that Russia is weaponising gas supply to Germany,’ said Dr Samuel Ramani, a Russia expert at the University of Oxford.

The Kremlin argues that Western sanctions have hampered the routine operations and maintenance of Nord Stream 1.

And last night former Russian president Dmitry Medvedev warned that Russia would simply turn off the taps to Europe if the EU pressed ahead with a separate price cap plan for gas.

The head of Germany’s network regulatory agency, Klaus Muller, tweeted that the Russian decision to keep Nord Stream 1 switched off for now increases the significance of new liquefied natural gas terminals that Germany plans to start running this winter, gas storage and a ‘significant need to save’ gas.

It is ‘good that Germany is now better prepared, but now it comes down to everyone,’ Mr Muller added.

The European Union has just reached its goal of filling its gas storage to 80%, ahead of a November 1 deadline, despite Russian supply cutbacks.

Meanwhile there are fears that should Russia stop providing gas and oil to Europe on a permanent basis, the UK could become hugely dependent on purchases of Chinese oil and gas – some of which may have been purchased from Russia.

Chinese purchases of Russian energy have significantly increased since the beginning of the war in Ukraine. China is already reselling large amounts of gas to third party countries, after buying it up from external sources.

Russian gas and oil can be purchased at comparatively low prices due to the heavy sanctions placed on the country by much of the western world. 

Gazprom said in its statement on Telegram that the oil leak detection report ‘was also signed by representatives of Siemens’. The energy giant warned a lack of spare parts threatened the site, and cited Siemens as saying that the necessary repairs could only be done in ‘the conditions of a specialised workshop’.

In a statement on Telegram, Gazprom provided what it said was a picture showing leaked oil on equipment at the compressor station – but German officials immediately cast doubt on their explanation.

‘There are no technical reserves, only one turbine is working,’ Kremlin spokesman Dmitry Peskov told reporters. ‘So the reliability of the operation, of the whole system, is at risk,’ he added.

Moscow has blamed sanctions for hampering routine operations and maintenance of Nord Stream 1. Brussels countered by saying this is a pretext and Russia is using gas as an economic weapon to rail against the West. 

Siemens Energy, which maintains the turbine, has also rejected Putin’s blaming of economic sanctions and says there are no legal obstacles to its provision of maintenance for the Nord Stream 1 pipeline. 

It comes days after Gazprom slashed its own supply into Germany for what it described as maintenance. 

Entsog, the operator of Nord Stream 1, announced that gas delivered were halted shortly before 06.00GMT on Wednesday. 

The three-day works at a compressor station were ‘necessary’, Gazprom said, adding that they had to be carried out after ‘every 1,000 hours of operation’. 

Last month capacity was dropped to just 20 per cent of usual levels amid tensions between Russia and the West following the Ukraine war. 

Europe has been on edge over soaring energy prices as Russia has dragged its feet and consistently curbed gas deliveries following of its invasion of Ukraine.

Germany, which is heavily dependent on Russian gas, and other European nations had earlier accused Moscow of using energy as a ‘weapon’ before Gazprom choked off all supplies this week.

Gas is used to keep industry humming, generate electricity and heat homes in the winter, and concerns are rising about a possible recession if Europe does not save enough gas and rationing is ultimately required.

With winter round the corner, European consumers are staring down the barrel of huge bills to power and heat their home. Some countries like France have warned that rationing is a possibility. 

‘We see that the electricity market does not work anymore because it is massively disrupted due to Putin’s manipulations,’ EU Commission chief Ursula Von der Leyen said, adding that a gas price cap on Russian pipeline supplies could be proposed at the European level.

Earlier today, the ministers from the club of wealthy industrial democracies confirmed their commitment to the plan after a virtual meeting.

They said, however, that the per-barrel level of the price cap would be determined later ‘based on a range of technical inputs’ to be agreed by the coalition of countries implementing it. 

Former Russian President Dmitry Medvedev said Moscow would turn off supplies to Europe if Brussels imposed such a cap. 

‘Today we confirm our joint political intention to finalise and implement a comprehensive prohibition of services which enable maritime transportation of Russian-origin crude oil and petroleum products globally,’ the G7 ministers said.

‘The provision of maritime transportation services, including insurance and finance, would be allowed only if the Russian oil cargoes are purchased at or below the price level ‘determined by the broad coalition of countries adhering to and implementing the price cap.’

The ministers said they would seek a broader coalition of oil importing countries to purchase Russian crude and petroleum products only at or below the price cap, and will invite their input into the plan.

However, some G7 officials expressed concerns that the price cap would not be successful without participation of major importers such as China and India.

Goldman Sachs predicts inflation will double in 2023 as the price cap on energy bills continues to rise pushed up by soaring gas prices with the rising cost of food and a weak pound also contributing to the crisis that is sending the UK hurtling towards a major recession. 

Energy regulator Ofgem announced last Friday its price cap would increase by 80 per cent to £3,549 per year in October. 

But bills are predicted to rise again to £5,400 in January and even further to £6,600 in spring according to forecasts from energy analysts Cornwall Insight. 

MoneySavingExpert founder Martin Lewis, told BBC Radio 4’s Today programme: ‘I’ve been accused of catastrophising over this situation. Well, the reason I have catastrophised is this is a catastrophe, plain and simple. 

‘If we do not get further government intervention on top of what was announced in May, lives will be lost this winter.’

The consumer champion also said the latest rise in the cap means some people will pay up to £10,000 a year in bills. 

Ofgem’s chief executive Jonathan Brearley warned of the hardship energy prices will cause this winter and urged the incoming prime minister and new Cabinet ‘to provide an additional and urgent response to continued surging energy prices’. 

He also said that the gas price this winter was 15 times more than the cost two years ago.

The predictions of £170billion profits for energy firms will be delivered by Treasury officials to the next Prime Minister on September 6, putting pressure on them to impose another windfall tax to ease the energy crisis this winter.

A tax at the current windfall rate of 25 per cent would bring in billions of pounds for the Treasury to help give assistance to households through the cost of living crisis. 

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