Russia Says It Will Increase Gas To Europe Under One Condition

Russia will increase its gas supplies to Europe if a turbine necessary for Nord Stream 1 that is currently undergoing repair in Canada is returned, Reuters reported on Friday.

Ukraine urged Canada on Thursday not to return a gas turbine to Gazprom, claiming that the Russian major has enough turbines to keep gas flowing to Europe at full capacity.

According to a Reuters report that cited a Ukrainian government official, if Canada returns the turbine to Gazprom, it would violate its own sanctions.

"The sanctions forbid the transfer of any equipment related to gas," the Ukrainian government source said.

"If, God forbid, this decision is approved, we will undoubtedly appeal to our European colleagues that their approach must be reassessed. Because if countries do not follow decisions they have agreed about sanctions, how can we talk about solidarity?" he added per Reuters.

Meanwhile, Germany's Economy Minister Robert Habeck called on Canada to release the turbine.

"I'll be the first one who will fight for a further strong EU sanction package, but strong sanctions means it must hurt and harm Russia and Putin more than it does our economy," Habeck told Bloomberg earlier this week. "Therefore, I ask for understanding that we have to take this turbine excuse away from Putin."

The turbine affair began last month when Gazprom began to reduce gas flows via the Nord Stream 1. The Russian state company attributed the reduction to a missing turbine that had not been returned after maintenance.

Germany's Siemens Energy explained that "Due to the sanctions imposed by Canada, it is currently impossible for Siemens Energy to deliver overhauled gas turbines to the customer. We have informed the Canadian and German governments and are working on a viable solution."

As a result of this delayed delivery, flows via the Nord Stream 1 pipeline are now at just 40 percent of capacity, and Germans are bracing for a complete halt of the flow for scheduled maintenance, which begins next week, on July 11.

Related: China Continues To Buy Record Levels Of Russian Crude

While normally Gazprom would divert flows to other pipelines, now there is fear it will not do so as relations between Russia and the European Union break records in reaching historically low point after low point.

Meanwhile, Canada has indicated that it has no intention of returning the turbine, with Natural Resources Minister Jonathan Wilkinson saying in late June that "If you talk to the Germans, they are very, very concerned about" their energy security. "I'm sure it'll come up at least in the corridors of the G7 ... I wouldn't hold my breath that we're going to find a resolution before the end."

A Ukrainian energy ministry source who spoke to Reuters, however, said they had information that Canada was preparing to make the transfer of the equipment, with another unnamed source saying that the decision had been made as Canada and Germany did not want to give Russia an excuse not to keep the gas flowing to Germany.

By Irina Slav for Oilprice.com

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