Deadlock with Russia over Nord Stream gas turbine is not our fault, Siemens Energy CEO says

Environment

Siemens Energy CEO Christian Bruch said Monday that there is no technical justification for Russia to refuse the delivery of a turbine for the key Nord Stream 1 gas pipeline.

His comments come amid a standoff between Germany and Russia over a piece of equipment that the Kremlin claims is holding back gas supplies to Europe.

Germany’s Siemens Energy, which supplies equipment to the power industry, says it is ready to return the turbine to Russia after carrying out maintenance work in Canada.

Moscow, however, says economic sanctions imposed by Canada, the European Union and Britain following the Kremlin’s onslaught in Ukraine have prevented the turbine from being shipped back. Russia says it needs documentation to confirm the turbine is not subject to Western sanctions.

Germany has contested this reasoning, saying the equipment is not affected by sanctions and accused Russia of not honoring its contracts for political reasons.

Russia recently cut gas supplies to Europe via the Nord Stream 1 pipeline, the EU’s single largest piece of gas infrastructure, to just a fifth of its capacity.

It is not yet known when or if Nord Stream 1 gas flows will return to normal levels.

German Chancellor Olaf Scholz says Russia is responsible for blocking the delivery of the turbine it needs to keep gas flowing to Europe.
Sascha Schuermann | Afp | Getty Images

“It is probably one of the most world famous turbines,” Bruch told CNBC’s “Squawk Box Europe” Monday, as the company warned of a deeper net loss over Russia restructuring.

“Why is it needed? It is a normal course of maintenance what we are doing here. So, you have six units installed in Russia, five are normally operating and then you have a spare unit which rotates around the globe between the maintenance hub and the operations — and that is the one unit which Gazprom is waiting for,” Bruch said.

“It still sits in Germany, and we have prepared all import papers to Russia, but we obviously do need certain import information from the Russian client which has not taken place yet,” he added.

Bruch said Siemens Energy was talking with Gazprom every day, but the turbine had not yet been cleared for shipping.

Gazprom was not immediately available to comment when contacted by CNBC.

‘There might be other reasons’

“As we always have said and I can only underline it, we cannot reconcile the direct consequences between this one spare turbine and the cut in gas supply, but that is really something up to Gazprom as the customer. So far, we [do] not yet have a clear timing when the turbine can be shipped to Russia,” Bruch said.

He added that turbine was due to be exchanged in September, “so there is nothing in terms of delay yet. And there [are] obviously other turbines also expected to be overhauled but we still have no major announcement of any breakdown from operations. And this is why I cannot reconcile a technical reason to the supply of gas.”

“There might be other reasons — and this is where I cannot really comment,” he added.

Some energy analysts have suggested that Russia may be using the deadlock over the turbine as a pretext to turn off the supply of gas to Europe for good.

— CNBC’s Jenni Reid contributed to this report.

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