Unveiling the Sinister Forces: The Shocking Truth behind Europe's Gas Pipeline Sabotage

An international investigation is underway following a suspected act of sabotage on a natural gas pipeline connecting Finland and Estonia. This incident raises further concerns about the security of Europe's energy infrastructure, especially in light of the Nord Stream 1 pipeline explosions that occurred last year. Finlands gas transmission operator, Gasgrid, announced on Sunday that it had temporarily closed the Balticconnector pipeline, which spans 95 miles under the Baltic Sea, due to a suspected leak. Gasgrid estimates that it will take a minimum of five months before the pipeline can be safely reopened.

Finnish President Sauli Niinistö has attributed the gas leak and damage to an underwater communications cable to external activity, raising concerns of a potential attack. As a result, European wholesale gas prices have surged by over 20% this week. NATO Secretary General Jens Stoltenberg emphasized the significance of determining the cause and extent of the damage.

"If it is confirmed as a deliberate assault on NATO's vital infrastructure, there will certainly be grave implications. Nevertheless, NATO is prepared to respond resolutely and in unison," Stoltenberg informed journalists during a summit held in Brussels.

The Balticconnector constitutes an integral component of an extensive network responsible for transporting gas from Lithuania, through Latvia and Estonia, all the way to Finland. Starting from April, Finland has been utilizing the pipeline to supply gas to Estonia when necessary, drawing from a new liquefied natural gas terminal situated on the Finnish end of the pipeline.

An offshore vessel of the Finnish Border Guard on patrol at sea on October 10, 2023, near the place where the Balticconnector was damaged

The Balticconnector serves as a connectivity channel but does not significantly contribute to gas imports into Europe. Its annual capacity of 2.6 billion cubic meters is only a small portion (0.63%) of the total 415 billion cubic meters of gas supplied to the European Union and the United Kingdom last year.

Why is the closure of the pipelines significant?

Jack Sharples, a senior research fellow at the Oxford Institute for Energy Studies, suggests that the incident is not primarily aimed at disrupting European gas supply. Instead, it raises broader concerns regarding the safety and security of offshore infrastructure, including gas pipelines, as well as electricity and communications cables that are laid on the seabed of the Baltic Sea.

An alarm bell

Gasgrid and its Estonian counterpart Elering "noticed an unusual drop in pressure in the Balticconnector offshore gas pipeline" on Sunday morning, Gasgrid said Tuesday.

The company released a statement suggesting that the damage to the offshore gas pipeline might be the reason behind the incident. NORSAR, Norway's seismology research center, announced on Tuesday that they had detected a likely explosion near the damaged gas pipeline and data cable along the Finnish coast of the Baltic Sea during the early hours of Sunday morning.

Finnish authorities have initiated a criminal inquiry into potential sabotage at the Balticconnector, while Estonia has commenced a criminal investigation into the malfunction of the communications cable, announced Estonias Prime Minister Kaja Kallas on Tuesday. This has left authorities and energy traders on edge. Just over a year ago, a succession of explosions shook the Nord Stream 1 pipeline, previously the primary conduit for Russian gas delivery to Europe through Germany, as well as Nord Stream 2. These detonations were widely believed to be the consequence of deliberate sabotage. The culprits responsible for the attacks remain unidentified.

According to Simone Tagliapietra, a senior fellow at the Bruegel think tank, the incident on Sunday serves as a significant warning for the EU. He emphasized that Europe cannot tolerate any interference with its pipelines and LNG infrastructure. Tagliapietra stated that if similar incidents were to occur on international pipelines that supply gas to Europe from Norway or Algeria, it would have severe repercussions on the European gas market, gas prices, and ultimately the economy.

Nervous market

In a squeezed global gas market, even relatively small upsets can send investors into a tizzy, sending prices higher.

The announcement of Gasgrid's closure of the Balticconnector led to a sharp 15% increase in futures prices for Europe's benchmark gas contract on Monday. Throughout the week, prices have continued to rise, reaching a total increase of over 20%. This rise can be attributed to the simultaneous news of Chevron (CVX), a US gas producer, revealing their Australian workers' plans to strike this month.

The recent escalation of the Israel conflict, which was triggered by a brutal attack on Israeli civilians by Hamas militants, has raised concerns about global gas supply. Chevron announced on Monday that it had decided to close a natural gas field off the Israeli coast due to security reasons. This particular site provides 70% of the country's energy for power generation. According to Sharples from the Oxford Institute for Energy Studies, the European gas market is already under strain, making any news related to this situation have an impact.

James Frater and Sharon Braithwaite contributed reporting.