European demand for natural gas prevailed in a weekend decision to let pipeline machinery bypass Canadian trade sanctions against Russia for invading Ukraine.


Canada’s Natural Resources Minister Jonathan Wilkinson described the move as “supporting Europe’s ability to access reliable and affordable energy as they transition away from Russian oil and gas.”

The decision allows a Canadian arm of Germany’s Siemens AG to return turbines for Russia’s Nord Stream 1 (NS1) gas pipeline. The equipment was in Montreal for maintenance when the Ukrainian war started.

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Europe, the largest buyer of Russian gas, imported about 45% of all its supply from Russia last year. The war in Ukraine, however, has led the continent to diversify its imports.

Russia’s Gazprom PJSC cut NS1 flows to Europe by about 60% in June. The Russian government blamed sanctions for stranding the equipment in Canada. NS1 is one of the largest conduits for moving gas to Europe. Russia has cut deliveries to European buyers on other systems in response to sanctions and failure to comply with Kremlin mandates designed to ease their impact on the country. 

Germany has felt the pinch most as the top Russian gas customer. The system was scheduled to shut down Monday for annual maintenance until July 21. European governments have expressed concerns about whether gas deliveries would resume on the line after maintenance ends. 

Concerns over NS1 had pushed European benchmark prices to some of their highest levels. The Dutch Title Transfer Facility contract was down on Monday following news of Canada’s decision to release the pipeline equipment. 

“Absent a necessary supply of natural gas, the German economy will suffer very significant hardship and Germans themselves will be at risk of being unable to heat their homes as winter approaches,” Wilkinson said.

He disclosed the trade sanctions bypass on Twitter. After the Ukraine government and the Ukrainian Canadian Congress deplored the step, Canada’s Foreign Affairs Minister Mélanie Joly repeated vows to resist Russian aggression.

“Canada will not relent in pressuring the Russian regime,” Joly said. She also vowed future trade sanctions to prohibit use of Canadian services by the Russian industries.

“These new sanctions will apply to land and pipeline transport and the manufacturing of metals and of transport, computer, electronic and electrical equipment, as well as of machinery,” said the Canadian government. No date was announced for the action.

Jamison Cocklin contributed to this story