Germany is under pressure to reduce its dependence on gas pipes from Russia, after Ukraine’s state-backed energy operator requested that the country’s government halt or severely curtail gas flows through the Nord Stream 1 pipeline
The head of Ukraine’s gas system operator Serhiy Makogon said: “With Naftogaz we sent an appeal to the German economy ministry and the German regulator… on the suspension of Nord Stream 1.”
Naftogaz is Ukraine’s largest gas and infrastructure operator, and is owned by the Ukrainian government.
It noted that Nord Stream 1 – a key Baltic Sea pipeline – is only allowed under German law on the basis it contributes to strengthening the security of European gas supplies, but that Russia’s actions have abused those principles.
“We see that Russia violates these principles: creating an artificial gas deficit last year; unilaterally insisting on payment in roubles; suspending gas supplies to Poland, Finland and Bulgaria” as well as invading Ukraine,” Makogon said.
It is now pushing Germany to direct flows through alternate transport routes via Ukraine, to force the Kremlin to pay more transit fees to the country.
The money could help fund Ukraine defensive efforts following Russia’s invasion and increase its leverage in the conflict.
While the Kremlin has consistently said it remains open to serving world markets with oil and gas, Russian President Vladimir Putin signed into law last month demands for “unfriendly” overseas suppliers to pay for gas in roubles – through a murky payment system – which multiple European companies have complied with.
So far, the European Commission has not designated countries and companies paying for Russian gas in roubles as sanction-busting.
Russia has also cut off gas to Bulgaria and Poland for refusing to accede to the demands, while it has also cut off electricity into Finland.
Earlier this year, German Chancellor Olaf Scholz halted the approval process for the Gazprom-backed Nord Stream 2 gas project, which would have doubled the volume of Russian gas flows into the country.
Nevertheless, the country is already dependent on Russia for nearly half its natural gas imports, with the European Union (EU) spending €25bn on Russian natural gas since the eruption of conflict in Ukraine.
There is no current expectation of the country introducing sanctions on Russian gas – even as the EU edges towards an oil embargo.
This makes the prospect of Germany complying with Ukraine’s demands a remote prospect, with the request instead reflecting the escalation of the conflict in Russia and the increased expectation of European support.