German Insurance Companies Renew Nord Stream 1 Coverage

By Charles Kennedy - Apr 04, 2023

Two German insurance majors have renewed their cover on the Nord Stream 1 pipeline that was sabotaged last summer and has been out of commission since then.

According to Reuters sources, the cover renewal could mean that a return to commission of the infrastructure is a possibility for Germany.

Allianz and Munich Re renewed their insurance cover of the pipeline to no opposition from the German government, Reuters reported citing the unnamed sources.

Such cover is important for the long-term prospects of such infrastructure, Reuters noted, but also quoted the German economy ministry as saying the renewal of the insurance cover was not any form of government support for Nord Stream 1.

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.

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.

While the blasts were described as sabotage from the beginning, the authorities of the countries that are investigating the event remain apparently uncertain about the perpetrators.

Russia, whose Gazprom holds a 51-percent stake in the pipeline, has said it would not bother with repairs as it sees no likelihood of restoring former relations with Europe.

Meanwhile, some of Nord Stream’s German shareholders apparently hope that relations would improve and Russian gas flows will resume, hence the insurance cover.

The official German position remains unyielding, however, with a spokesman for the economy ministry telling Reuters that the government aimed to reduce both imports of Russian gas and all gas eventually, as it forged ahead with the shift to alternative energy sources.

By Charles Kennedy for Oilprice.com