BRUSSELS — Russian energy giant Gazprom announced Friday that it won’t reopen the Nord Stream 1 gas pipeline tomorrow as expected, leaving Europe at risk of severe energy shortages in the winter and the rest of the world bracing for price increases.
Germany last month called similar shut-offs a political move by the Kremlin to increase uncertainty as the European Union hits Russia with unprecedented sanctions in response to the war in Ukraine. Friday’s news will deepen fears that Russia will continue to curb — or even cut — gas supply.
The move comes as Europe is scrambling to confront acute energy disruptions that threaten to leave the continent short of the fuel it needs when temperatures drop. The shutdown extension is expected to send gas prices up sharply when markets open on Monday. If the pipeline stays offline permanently — and Europe has a particularly cold winter — the economic consequences for Europe and the world would be considerable.
“The concern is if supply gets squeezed, you have to find replacements and there is not enough infrastructure there right now to replace this gas,” said Ruth Liao, who covers liquefied natural gas for ICIS, a commodities research firm. That means big industrial operations in Europe reliant on natural gas face possible shutdowns as the fuel available gets routed to keep the heat on in homes.
The fallout could reverberate far beyond Europe, Liao said, as fuel shortages send prices up worldwide, putting financial strain on factories in South America and Asia that at a certain point couldn’t afford to operate.
European leaders suspect that is exactly Russia’s intent.
“Gazprom’s move is sadly no surprise,” tweeted Charles Michel, president of the European Council. “Use of gas as a weapon will not change the resolve of the EU. We will accelerate our path towards energy independence. Our duty is to protect our citizens and support the freedom of #Ukraine.”
The uncertainty over Europe’s gas supply comes as the E.U. debates new measures to tackle energy prices. E.U. energy ministers will meet in Brussels on Sept. 9 to discuss calls to overhaul the bloc’s power market.
Analysts at the research firm Wood Mackenzie warned on Friday that if the pipeline stays shut and the winter in Europe turns out to be bitterly cold, energy reserves on the continent could drop to dangerously low levels, forcing strict limits on natural gas and electricity use.
Worries about such a scenario, the firm’s analysts say, will continue to put upward pressure on gas prices for the rest of this year.
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