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In The New York Sun, James Brooke explains that the war with Ukraine has decimated Russia’s natural gas industry, which Brooke calls the “lifeblood” of the Putin-era Russian economy. He writes:
Overlooked by the world press, two fires broke out last week at the Russian end of its $13 billion TurkStream pipeline. The powerful Russkaya compressors pump Russian gas 578 miles across the Black Sea to Turkey and on to Central Europe. Ukrainian long-range drones presumably caused the mystery fires. Confirmed by NASA satellite photographs, the fires cast a spotlight on Russia and Ukraine’s murky “Spy vs. Spy” gas pipeline war.
While smartphone videos posted online highlight Ukraine’s air war against Russian oil refineries and Russia’s air war against Ukraine’s power plants, the pipeline battles are played out of sight, often under water. The refinery war stakes can be measured in millions of dollars. The pipeline war stakes are billions of dollars and the future of Russia’s economy. As Russia loses its top market for its top export — European purchases of natural gas — Russia loses the economic lifeblood of the Putin era.
The first blow was landed on September 26, 2022, when underwater explosions severed three of the four gas lines of the $12 billion Nord Stream II project. Running 767 miles below the Baltic Sea, the pipeline system was to send gas directly to Germany from Russia, bypassing a Soviet-era network across Ukraine. Almost two years later, official investigators have not publicly identified suspects. However news reports point to the involvement of a Ukrainian commando group.
Last October, it was the turn of the Russians. A China-flagged ship, the Newnew Polar Bear, with Russian crew aboard, apparently dragged its port side anchor along a key section of the Baltic seabed. It reportedly damaged a Sweden-Estonia communications cable and the Balticconnector Finland-Estonia natural gas pipeline. On October 24, two days after the ice-class ship arrived in Russia’s Arkhangelsk port, the Finnish National Bureau of Investigation retrieved the anchor embedded next to the damaged gas line.
Above ground, Ukraine says that at the end of this year, it will not renew a five-year contract with Gazprom to ship gas to Central Europe. Unless the gas is routed through TurkStream, Gazprom stands to lose $4.5 billion in gas sales to Europe next year.
In a blow to what remains of foreign investor confidence in Russia, a Russian court on Tuesday barred Swiss energy trader DXT Commodities from pursuing offshore arbitration proceedings against Gazprom. Gazprom’s export arm has filed more than ten lawsuits with the same arbitration court at Saint Petersburg to block its former European customers and shippers from invoking international arbitration clauses in their contracts.
With European imports of Russian gas down to 10 percent of pre-war averages, it now is clear that Russia is losing the cash cow of the Putin quarter century.
Read more here.
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