A recent flurry of articles published in international media about the sabotage of Russia’s Nord Stream pipelines in September has left readers with more questions than answers.
Accusations that the UK, the US, or a Ukrainian-linked group had blown the pipelines were fairly easily shown to be impractical speculation (each of the three explosions required support ships and hundreds of kilos of explosives) or Russian propaganda. The widespread initial assumption — that Russia did it — has largely fallen by the way.
Yet a more careful review of the evidence suggests that the Nord Stream sabotage was in fact the culmination of a long string of events that started the previous year to serve Russia’s war plans against Ukraine. In other words, Russia probably did it after all.
Publicly available data show that as early as spring 2021, Russia unleashed a “gas war” against Europe, apparently aiming to feed European fear of an energy famine and to ratchet up profits in preparation for its full-scale invasion of Ukraine.
The story began in May 2021 when the Russian state-owned company Gazprom refused to meet growing European gas demand following the lifting of Covid-related restrictions. From this point, gas prices began to rise by an average 7% to 10% each month until later that summer, when the increases accelerated still more.
By then it was clear that Gazprom was not injecting gas into the storage facilities it operated in Europe, sowing panic in the market as the heating season approached.
In 2020, Gazprom-operated storage sites in Europe were 90% full. By the start of October 2021, they were just over 20% full as shown in Fig. 1.
Some observers suggested Gazprom had experienced production problems. Others were more skeptical, suspecting the company was blackmailing Europe into certifying the newer Nord Stream 2 pipelines, which had been completed and were awaiting regulatory and technical certification by Germany and the European Union (EU.)
In fact, as production and supply data published by Gazprom itself suggest, Russia’s motives may have been even more disturbing.
As 2021 drew to a close, Gazprom boasted it had accumulated a record 72.6bn cubic meters in storage facilities across Russia. If that was the case, then Gazprom’s next move — to reduce and then cut supplies to Poland via the Yamal pipeline transiting Belarus — could only be explained as a deliberate act to instill fear and push up gas prices still further.
By the end of 2021, gas prices were six times higher than at the start of that year and European economies were beginning to reel.
Heavy turbulence in the gas market helped Gazprom to a record profit of $29bn in 2021 compared to $2bn in 2020.
The Kremlin launched its full-scale invasion of Ukraine on 24 February 2022. With Russia expecting to take Kyiv within a few days, it is likely that Gazprom saw no need to reduce production and exports further. But as Russia’s military adventure began to fail, and as Europe reacted vigorously by introducing concerted sanctions and a plan to phase out Russian gas imports, Gazprom immediately initiated a sharp reduction in production (as illustrated in Fig. 2.)
There then followed a series of Russian steps that arguably indicate a policy of inflicting chaos on the European markets hitherto so dependent on its energy supplies.
These culminated with the complete curtailment of supplies via the Nord Stream 1 pipeline and all-time high gas prices in August 2022.
Each of the events included in the timeline below was designed to destabilize markets, undermine European support for Ukraine, and earn Russia prodigious profits:
- 23 March – Russian President Vladimir Putin demands European clients pay for gas in rubles
- 27 April –Bulgaria and Poland refuse and gas supplies are terminated.
- 14 June – Gazprom declares it will reduce shipments via Nord Stream from 166 mcm/day.
- 15 June – Supplies via Nord Stream 1 are cut further to 67 mcm/day
- 25 July – Nord Stream 1 volumes decreased to 33 mcm/day
- 31 August – Supplies via Nord Stream 1 halted.
Less than a month later, on 26 September, came the first reports that both the Nord Stream 1 pipelines and one of the (so far unused) Nord Stream 2 pipelines had been blown up.
Although it may seem irrational to claim that Russia had sabotaged its own pipelines there are at least two reasons that suggest it may have been motivated to do so.
Firstly, such an act would have been consistent with its strategy since spring 2021 to subvert markets and force Europe to abandon its support for Ukraine.
It’s clear what Russia thought would happen as Nord Stream 1 flows came to a halt. One of Putin’s right-hand men, Dmitry Medvedev, predicted further skyrocketing prices and, a video, which started circulating on the web threatened Europe with a new ice age.
Secondly, Russia knew that by cutting gas supplies to Europe, it would be liable to pay penalties for non-delivery. European buyers who held long-term contracts with Gazprom and had their supplies cut off were forced to buy gas on the spot market as a result.
Calculated at prices in the second half of 2022, the replacement volumes bought by European companies cost around $40bn, more than three times the cost of Nord Stream 2, and 80 times greater than the estimated $500 million bill to repair the ruptured pipelines.
Arbitration claims filed since then are reported to press for damages based on this difference.
The blast, however, allowed Gazprom to invoke force majeure and may enable it to argue that it lacked the means to fulfill its contractual responsibilities.
Would Russia do such a thing? It is worth remembering that in 2009, Gazprom was accused by Turkmenistan of doing precisely this — of triggering an explosion bearing many similarities to the Nord Stream sabotage. Turkmen authorities claimed at the time that this was designed to help Russia escape its contractual obligations.
Nothing in the behavior of the Putin regime suggests it would hesitate to take military measures if it could see a benefit. Russia remains the likeliest culprit.
Dr. Aura Sabadus is a senior energy journalist who writes about Eastern Europe, Turkey, and Ukraine for Independent Commodity Intelligence Services (ICIS), a London-based global energy and petrochemicals news and market data provider. The views expressed are her own.
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis.
