Tensions continue to skyrocket, something many chalk up to post-pandemic pandemonium. However, as people continue to be affected by infections, inflation, food shortages, a rapid rise in petrol prices, and more, world leaders must comprehend the depths of their key positions.
This morning, following last week’s G20 summit, Germany announced its fear of getting its gas completely cut-off off as Russia closes the Nord Stream 1 Pipeline for what Russia named, ‘annual maintenance.’ The Nord Stream 1 pipeline brings fuel to Germany via the Baltic Sea. The annual maintenance usually closes the pipeline down for the duration of ten to fourteen days.
Although the maintenance occurs annually, this is the first time in decades that policies are getting prepared for the possible event of being prepared in case the Russian gas supply gets cut.
The head of the International Energy Agency, Fatih Birol, escalated the fears when she warned that Russia might cut off European gas supplies entirely, urging Europe to prepare quickly. Russia already cut gas supplies to Poland, Bulgaria, the Netherlands, Denmark, and Finland over their refusal to accept its new payment system.
Due to the current Russia-Ukraine, and the West’s blatant disapproval, sanctions have hit Russia hard. However, the country hit back when it cut Europe’s gas supply by nearly 60% since the beginning of the invasion. It blamed a delay in the return of equipment being serviced by Germany’s Siemens Energy. Many ministers claim that Russian President Putin is using gas “as a weapon.”
This accusation follows the G20 summit in Bali last Thursday and Friday. The U.S. said it was keen on preventing Russia from legitimizing Russia’s ‘brutalizing’ of Ukraine—sparking curiosity about what was said in that room of world leaders.
Following the summit, the Kremlin announced on Friday that once the turbine was brought back to Russia, the gas supply to Europe would increase. However, many have fallen for Russia’s dishonesty with much less to lose.
On Saturday, in an attempt to alleviate Germany’s Siemens Energy, the Canadian government said it would return a repaired Siemens turbine to Germany for the pipeline. This action grants Siemens Canada a “time-limited and revocable permit” to return repaired turbines to Germany, despite sanctions against Russia.
According to a translation made by the Guardian, German economy minister Robert Habeck told Deutschlandfunk radio on Saturday: “Everything is possible, everything can happen, it could be that the gas flows again, maybe more than before. It can also be the case that nothing comes.” the Minister went on to describe the potential outcome as a “nightmare scenario.”
While at an economic conference in southern France, Bloomberg reported that French Finance Minister Bruno Le Maire told his affiliates on Sunday to prepare for the “most likely scenario” of a total cut-off of Russian gas. Axel Gedaschko, a German politician and president of GdW said, “The situation is more than dramatic.”
A sudden overnight reduction in Russian supply might send Germany into a severe recession due to entire enterprises weighing on gas and German houses relying heavily on gas for their heating systems. If the situation worsens, Germany may be forced into its ‘three-stage plan’ of rationing natural gas.
Globally, every oil-producing nation has the capacity to produce exactly 1 million barrels per day more than we require. However, Russia seems to be the only country that has as large a capacity as it does. Russia is thought to be able to cut production without economical deficits if they feel pressure coming from NATO. If Russia were to cut its daily output and only released three million barrels per day, it would cost someone $190 per barrel. If Russia were to cut its output by five-million barrels, the cost per barrel would skyrocket to $380 per barrel. Russia’s self-sustaining abilities are what have kept the country afloat since its initial invasion of Ukraine.
While according to the Financial Times, Berlin has since turned down the temperatures of its outdoor pools, and the city of Cologne decided to dim street lights after 11 pm. For now, local officials are urging people to ration their energy. Landlords are getting asked to ration hot water, and leaders like German economy minister Habeck call on the German people earnestly to conserve. While prioritizing key services such as hospitals.
Another undersea Baltic pipeline from Russia, Nord Stream 2, has been built, however, plans to pump gas through it are now on hold due to the current conflict. Luckily, the German government also gave the go-ahead for Germany’s first LNG terminal to be built, at Wilhelmshaven where they plant to attempt to tap into natural gas.
As countries take a new approach by gaining a new outlook, they’ve learned that the markets are pivoting due to Putin’s actions. One step ahead of everyone is China. Through its Belt and Road Initiative. It’s allocated and placed approximately thirty nuclear reactors in countries outside of the country, something that China has been widely criticized for in the past.
