Gas prices soar again in Europe as Russia blames 'western sanctions' for pipe closure

Gas prices rose by as much as 30% in Europe on Monday after Russia announced a major pipeline to the continent would remain shut indefinitely.

Russian energy company Gazprom said on Friday that a suspension of gas supplies heading west through the Nord Stream 1 pipeline would be extended because oil leaks in turbines need fixing.

That move has brought a surge in European natural gas prices and walloped global stock markets.

High energy prices and possible shortages this winter in western Europe have set alarm bells ringing among governments, notably those in the European Union.

But a senior Kremlin official has laid the blame squarely on western sanctions placed on Russia in the wake of its invasion of Ukraine.

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In some of the bluntest comments yet in the standoff between Moscow and western Europe over energy supplies, Kremlin spokesman Dmitry Peskov said problems with pumping the gas occurred “because of the sanctions.”

“Other reasons that would cause problems with the pumping don’t exist,” he claimed.

The sanctions on Moscow and Russian companies have created problems with equipment maintenance, he said, though that claim has been refuted by western governments and engineers.

German officials have rejected those explanations, describing them as a political power play.

Germany’s Siemens Energy, which manufactured turbines the Nord Stream 1 pipeline uses, said turbine leaks can be fixed while gas continues to flow through the pipeline.

Could there be blackouts in the UK?

The UK is not reliant on Nord Stream 1 for its gas, but the price rises triggered by its closure could impact supply.

The government has insisted that there will be no blackouts. Earlier in August, a spokesperson for No 10 Downing Street said that people will still be able to access energy over coming months.

“Households, businesses and industry can be confident they will get the electricity and gas that they need over the winter,” she said.

“That’s because we have one of the most reliable and diverse energy systems in the world.”

Even so, Ofgem has appointed a new senior executive to ensure that the lights stay on this Christmas, as fears remain that a gas shortage could cause problems in meeting demand.

Akshay Kaul will take on the job as interim director of infrastructure and security of supply over the winter period, the regulator said.

What about elsewhere in Europe?

The German government has already introduced a raft of new measures in a bid to maintain sufficient energy supplies for the winter.

These include a controversial return to coal and oil powered energy plants and a campaign to encourage consumers to cut down on usage.

Among other measures, lights will be turned off on monuments and public buildings, shop doors will be closed to save heat, advertising billboards switched off at night and there will be a ban on heating private swimming pools.

France's Prime Minister Elisabeth Borne, meanwhile, warned last month that a worst-case scenario this winter could lead to rolling two-hour power cuts in French homes.

She said the situation is partly due to the consequences of the war in Ukraine and also to the planned shutdown of about half of France's 56 nuclear reactors for maintenance notably to repair corrosion problems.

France relies on nuclear energy for about 67% of its electricity - more than any other country - and on gas for about 7%.