Canada to bring back sanctions on Nord Stream pipeline parts

Nord Stream 1 Source: Nord Stream

Prime Minister Justin Trudeau’s government is revoking the waiver that exempted Nord Stream pipeline turbines from Canadian sanctions on Russia’s oil and gas industry.

The decision had been communicated to the German and Ukrainian governments and was made public Wednesday evening, confirming an earlier Bloomberg report.

Trudeau and German Chancellor Olaf Scholz discussed the matter on a call Tuesday, though Natural Resources Minister Jonathan Wilkinson has been the main point of contact with European counterparts.

Nord Stream, owned by Gazprom PJSC, supplied natural gas from Russia to Germany but has remained shut down after being damaged by undersea explosions in late September — making the sanctions waiver a moot issue for the foreseeable future.

“Canada is making this decision recognizing that the circumstances around granting the waiver have changed,” Wilkinson and Foreign Affairs Minister Melanie Joly said in a statement. “It no longer serves its intended purpose.”

Earlier this year, the turbines were caught up in geopolitical wrangling between Russia, Germany, Ukraine and Canada. 

Manufactured by Siemens Energy AG, they need regular maintenance at a facility in Montreal. But a return shipment was halted when Canada unveiled sanctions in June that prohibited companies from providing services to Russia’s energy industry.

Germany, facing a potential crisis due to being cut off from Russian gas, pressured Canada for an exemption on the turbines, to avoid giving Russia an excuse to shut down the pipeline completely. Ukraine, meanwhile, furiously opposed any loophole that weakened sanctions.

New Gas Contracts

After a public appeal from German Economy Minister Robert Habeck, Canada announced a sanctions waiver on July 9. That allowed for a turbine in Montreal to be sent back to Europe, and for other turbines to be sent to Canada for servicing over the next two years.

In the end, Russia refused to take the turbine back and insisted it was Germany causing the problem, arguing that more sanctions had to be lifted.

Wilkinson and Joly defended the waiver regardless, saying Putin had been “forced to show that his intention was never to return Nord Stream 1 to full operation.”

Now, with Nord Stream idled due to the explosions and Germany signing contracts for other sources of gas, the turbine issue has faded in importance, giving the Canadian government room to revoke its waiver.

© 2022 Bloomberg L.P.

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