Canada working with Germany on options to restore vital gas flow

Canada is wrestling with how to comply with sanctions on Russia’s oil-and-gas business without penalizing big customer — and Ottawa ally — Germany at the same time, a Cabinet minister said.

Penalties on Russia for invading Ukraine left a turbine needed to help run the Nord Stream pipeline stranded in Canada. Soon after, Russia’s state-run gas giant Gazprom PJSC slashed supplies through the pipeline, the biggest gas link to the European Union, to just 40 per cent of capacity.

That compounded a price surge in Europe, and prompted German and Italian leaders to question whether Gazprom’s move was politically motivated rather than caused by technical issues as claimed. Governments across Europe went on high alert amid a mounting possibility of rationing, while Germany, the Netherlands and Austria revived coal plants to help ward off potential shortages in the winter, when demand is highest.

“We want to respect the sanctions because the sanctions were put into place for a reason,” Canada Natural Resources Minister Jonathan Wilkinson said in an interview. “That being said, the intent of the sanctions was never to cause significant pain to Germany, which is one of our closest friends and allies. So we are very seized with this issue.”

The turbines were manufactured in Canada and need to be regularly sent back there for maintenance by Germany’s Siemens Energy AG. One of them was being overhauled in Montreal, but now it can’t be returned as Canadian sanctions imposed this month prohibit vital technical services from being exported to Russia’s fossil-fuel industry.

Other turbines are still in Russia, but not all of them are working, according to Gazprom. The energy giant cited orders from the state safety regulator to stop using equipment that’s due for its regular maintenance.

“We are talking to Germany, trying to find a pathway through which we can actually enable the flow of gas,” Wilkinson said. “There may be different options that we can look at.”

Russia is ready to supply the European Union, but turbines have to be returned after maintenance, the Kremlin said this week.

Nord Stream’s entry point, the Portovaya compressor station in Russia, needs six major turbines to pump gas into the Baltic Sea pipeline at full capacity. But only two of them are currently in operation, according to a person familiar with the situation.

On top of that, Nord Stream is scheduled to be shut down for 10 days next month to go through annual works.

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