According to an article by Reuters, German insurers Allianz and Munich Re have renewed cover for the Nord Stream 1 gas pipeline, which offers a potential revival after the alleged sabotage attack in September of last year.
Previously critical for the pipeline’s long-term future, Allianz and Munich Re’s support was the primary route for Russian gas to Europe for a decade prior to the attack in September. The 55-billion-cubic-meter pipeline was the main conduit of Russian natural gas to Europe and specifically Germany, which was Moscow’s biggest gas customer until last year.
However, the renewal of coverage by the German insurance giants stands in contrast to Germany’s public stance of severing ties with Moscow, although one source notes that the German government hasn’t necessarily opposed the cover.
Most Western investors have written off their stakes in the pipeline, though some of Nord Stream’s German shareholders favor preserving the damaged pipeline in case relations with Moscow improve, it is reported.
The insurance policy covers damage to the pipeline and business interruption issues, which would facilitate any necessary repairs to resume gas supplies under the Baltic Sea to Europe.
While the import of Russian crude oil and oil products is prohibited under European Union sanctions, Russian gas imports are allowed. Nonetheless, the West is seeking alternative sources of energy.
Europe’s imports of Russian gas have fallen from around 40% of EU gas supply to less than 10% since Russia’s invasion of Ukraine began in February last year.
Following the Russian incursion into Ukraine, Germany spearheaded a sanction wave that prompted retaliation from Russia in the form of a gradual lowering of gas volumes delivered to Europe, especially via Nord Stream.
Then, in July, Gazprom shut the pipeline down for repairs but in September, a series of blasts along both Nord Stream 1 and its twin Nord Stream 2 suddenly darkened the prospects of any restart of the pipeline.
The economy ministry spokesperson said the aim was to stop using gas from Russia, “Russia showed everyone last year that it is not a reliable partner,” said the spokesperson. “We need more renewable energies and must become independent of fossil imports.”
The stance represents a major shift from Germany’s previous whole-hearted support for Russian gas, in defiance of warnings from other EU countries and the United States.
Some German officials, politicians and others familiar with the German government told Reuters that a minority still hoped Nord Stream 1 can be revived, even if few saw any prospect of that happening in the near future.
Veronika Grimm, one of the government’s chief economic experts who advises the chancellery, said Germany’s previous policy of relying on cheap Russian gas to support its economy and build political ties was no longer viable.
“There are still some who follow an old logic with regards to rebuilding energy ties to Russia after the (Ukraine) war,” Grimm told Reuters.
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Sources: Oilprice.com (Charles Kennedy), Reuters.