If there were any lingering doubts as to whether something akin to a worst-case scenario is now the base case in Europe’s ongoing energy crisis, they were put to bed Tuesday.
“It’s hard to imagine these are coincidences,” Denmark’s prime minister Mette Frederiksen said, addressing natural gas leaks in Danish waters. The Danish military released footage showing bubbles in the Baltic. The source: The Nord Stream network.
The leaks were discovered by a Norwegian F-16 interceptor response unit, according to Defense Command. “Nord Stream 1 has two leaks northeast of Bornholm and Nord Stream 2 has one leak south of Dueodde,” officials said Tuesday.
Tensions were exacerbated by a dispute between Moscow and Kyiv over fuel transit payments. Naftogaz is pursuing arbitration, and Gazprom isn’t pleased about it. If Russia sanctions Naftogaz, it could jeopardize a portion of remaining gas flows to northwest Europe. Benchmark gas prices jumped 20% (figure below).
“Gas pipeline breaks are extremely rare,” Kristoffer Bötzauw, Director of the Danish Energy Agency remarked, in a press release documenting the evolving drama in the Baltic. “Therefore we see reason to raise the level of preparedness as a result of the incidents we have seen over the past 24 hours.”
Following the onset of Vladimir Putin’s “special military operation” in Ukraine, the Kremlin spent five months curbing flows through the system as part of an effort to slowly suffocate Europe in retaliation for draconian Western sanctions. Late last month, Gazprom announced three days of unscheduled “maintenance” to the Nord Stream 1, a pretext for the complete cessation of flows through the link, which Moscow (implausibly) blamed on an oil leak.
Let me dispense with the obvious: The West didn’t dynamite the Nord Stream. But Putin might’ve. The Swedish National Seismic Network detected a pair of significant underwater explosions on Monday very close to the leaks, registering 1.9 and 2.3 on the Richter scale, respectively. “There’s no doubt that these are blasts or explosions,” Björn Lund, a lecturer in seismology at SNSN told SVT, which, after obtaining the coordinates of the explosions, confirmed that “they’re in the same area where the gas leaks were registered.”
Although SNSN wouldn’t “speculate” on what caused the explosions, a German security official said the evidence suggests “a violent act” or, more to the point, sabotage. German authorities are investigating the leaks as deliberate attacks.
Mateusz Morawiecki, Poland’s prime minister, was unequivocal. “We don’t know the details yet, but we can clearly see it’s an act of sabotage,” he said, speaking (appropriately) at an event inaugurating a new undersea link connecting Poland to Norway through Denmark. Morawiecki went on to suggest the leaks “probably mark a new stage” in the Ukraine conflict.
Putin has stepped up attacks on Ukraine’s critical infrastructure amid setbacks for the Russian military. Last week, Moscow escalated the situation materially, when Putin called a partial mobilization and declared his support for the forced annexation of occupied territory via what Western officials quickly derided as sham referendums.
Following inflammatory remarks from Dmitry Medvedev, US officials warned the Kremlin (again) against deploying nuclear weapons. Medvedev opened the door to such an escalation by claiming Russia would be within its rights to use nuclear arms to defend the newly annexed territory. Medvedev referred to the annexations as “irreversible.”
Now, some worry Putin is set to begin a campaign of sabotage aimed at European infrastructure outside of Ukraine, either through cyberattacks or outright. “Inside the energy industry, policymakers and executives whisper that their concerns about the coming winter aren’t restricted to gas supplies, but also encompass cyberattacks and sabotage against the energy distribution network,” Bloomberg’s Javier Blas wrote Tuesday, in a very good opinion piece. “For months, officials and executives have discussed the risk in private. Now, the nightmare appears to be coming true.”
Plainly, these events mean the Nord Stream is closed for the winter, and maybe forever. Nord Stream (which in this case just means Gazprom) described the damage as “unprecedented” and said “it’s impossible to estimate the timeframe for restoring operations.”
State media in Russia appeared to blame the CIA. RIA Novosti, for example, called the US “an active opponent of Russian gas supplies to Europe.” If Anthony Blinken was aware of a clandestine US intelligence operation, he did a good job of feigning ignorance. “There are initial reports indicating this may be the result of some kind of sabotage,” he mused, repeating the media’s own reporting back to it.
Kremlin propaganda outlets also suggested Ukraine might’ve been involved. Kyiv feared “losing revenues from the transit of Russian gas,” the narrative goes. I’d dryly note that no Russian gas was in transit. Because Putin cut it off.
Occam’s razor applies here. With apologies to The New York Times, which haplessly ventured that “it was not immediately clear who would benefit from ruptures in the pipelines,” it’s absolutely clear who benefits. The fact that the pipelines weren’t operational is irrelevant. These kinds of escalations can drive up energy prices, which in turn puts more upward pressure on sky-high inflation in Europe, further imperiling government finances.
Producer price inflation in Germany was 46% last month. Costs for electricity redistributors rose 278% versus August of 2021. Natural gas distribution prices rose almost 210%. Berlin nationalized Uniper last week. In the UK, Liz Truss is staring at an uncapped liability tied to an energy price cap pledge. The pound and the euro are in free fall.
Again: It’s blatantly obvious who benefits. Putin benefits by pushing the UK and Europe even closer to the precipice of economic oblivion. Beyond that, the implicit threat of physical attacks on infrastructure is terrifying for the populace. Putin’s war machine, you’re reminded, runs on terror tactics. Just ask Aleppo.
On Tuesday, Mykhailo Podolyak, a senior adviser to Volodymyr Zelensky, called the leaks “a terrorist attack planned by Russia.”