Overlooked by the world press, two&nbsp;fires broke out last week at the Russian end of its $13 billion TurkStream pipeline. The powerful Russkaya compressors pump Russian gas 578 miles across the Black Sea to Turkey and on to Central Europe. Ukrainian long-range drones presumably caused the mystery fires. Confirmed by NASA satellite photographs, the fires cast a spotlight on Russia and Ukraine’s murky “Spy vs. Spy” gas pipeline war.



While smartphone videos posted online highlight Ukraine’s air war against Russian oil refineries and Russia’s air war against Ukraine’s power plants, the pipeline battles are played out of sight, often under water. The refinery war stakes can be measured in millions of dollars. The pipeline war stakes are billions of&nbsp; dollars and the future of Russia’s economy. As Russia loses its top market for its top export — European purchases of natural gas — Russia loses the&nbsp; economic lifeblood of the Putin era.



The first blow was landed on September 26, 2022, when underwater explosions severed three of the four gas lines of the $12 billion Nord Stream II project. Running 767 miles below the Baltic Sea, the pipeline system was to send gas directly to Germany from Russia, bypassing a Soviet-era network across Ukraine. Almost two years later, official investigators have not publicly identified suspects. However news reports point to the involvement of a Ukrainian commando group.



Last October, it was the turn of the Russians. A China-flagged ship, the Newnew Polar Bear, with Russian crew aboard, apparently dragged its port side anchor along a key section of the Baltic seabed. It reportedly damaged a Sweden-Estonia communications cable and the Balticconnector Finland-Estonia natural gas pipeline. On October 24, two days after the ice-class ship arrived in Russia’s Arkhangelsk port, the Finnish National Bureau of Investigation retrieved the anchor embedded next to the damaged gas line.



Above ground, Ukraine says that at the end of this year, it will not &nbsp;renew a five-year contract with Gazprom to ship gas to Central Europe. Unless the gas is routed through TurkStream, Gazprom stands to lose $4.5 billion in gas sales to Europe next year.



In a&nbsp;blow to what remains of foreign investor confidence in Russia, a Russian court on Tuesday barred Swiss energy trader DXT Commodities from pursuing offshore arbitration proceedings against Gazprom. Gazprom’s export arm has filed more than ten lawsuits with the same arbitration court at Saint Petersburg to block its former European customers and shippers from invoking international arbitration clauses in their contracts.



With European imports of Russian gas down to 10 percent of pre-war averages, it now is clear that Russia is losing the cash cow of the Putin quarter century.&nbsp;



Back in 2007, executives at Gazprom announced their ambition to make Russia’s state gas exporting monopoly the world’s first company with a $1 trillion stock market valuation. Due to sanctions and the Ukraine war, though Gazprom’s operating results veered to a $6.9 billion loss in 2023 from a $12.6 billion profit in 2022 —&nbsp; its first loss in 25 years. Today, Gazprom, Russia’s largest company,&nbsp; has a market capitalization of $32.8 billion, making it the world’s 603rd most valuable company.



The Kremlin’s pivot to the East is not expected to save Gazprom. Communist China currently buys gas from Gazprom at half the price paid by European customers. During the rest of this decade, China’s gas consumption is expected to rise by about 50 percent. However, this demand can largely be met through existing contracts and by imports of liquefied natural gas.



Enjoying the whip hand in its economic relationship with Russia, China shows no urgency in building the Power of Siberia 2, a pipeline project seen as Gazprom’s salvation. Almost two decades after the first memorandum of understanding was signed, China still holds out for bargain basement prices. The Financial Times<a href="https://www.ft.com/content/f7a34e3e-bce9-4db9-ac49-a092f382c526"> reported</a> Sunday that China only commits to buying a small portion of the pipeline capacity and wants to pay close to Russia’s heavily subsidized domestic prices.



“The main consequences of sanctions for Gazprom and the energy industry are the contraction of export volumes, which will be restored to their 2020 level no earlier than in 2035,”&nbsp;<a rel="noreferrer noopener" href="https://www.ft.com/content/21f8f63f-80d6-455f-abf8-fce269d70319?desktop=true&amp;segmentId=d8d3e364-5197-20eb-17cf-2437841d178a#myft:notification:instant-email:content">warns</a> a 151-page Gazprom-commissioned report cited in Wednesday’s Financial Times.



This raises the stakes for TurkStream, Russia’s last major pipeline connection to Europe. Barely three years old, TurkStream is a big worry for&nbsp;Hungary, which relies on the Russian pipeline for 65 percent of its annual gas consumption. 



“We have an interest in the TurkStream gas pipeline remaining a secure and reliable route for gas deliveries to Hungary,” the Hungarian minister of foreign affairs and trade, Péter Szijjártó, said on May 25 after a meeting at Budapest with Bulgaria’s energy minister, Vladimir Malinov. 



Noting that Bulgaria is the primary transit country for the gas, he added: “The TurkStream gas pipeline will continue to function as one of Europe’s most secure and predictable routes.”



A few days later, analysts studying satellite photos from NASA’s Fire Information Resource System detected two powerful fires at the Russkaya compressor station near Anapa, on Russia’s Black Sea coast. <a href="https://t.me/s/Crimeanwind">Reported</a> by dissident Russian Telegram channel Crimean Wind, the fires at the starting point TurkStream were not mentioned in Russia’s state-controlled press.

The underwater gas leak from the Nord Stream 2 pipeline in the Baltic Sea on September 28, 2022. 

Mystery Fires at Key Russian Gas Pipeline Underscore the Humbling of Russia’s Gazprom, Cash Cow of Putin Era

If the stakes in Ukraine’s attacks on refineries can be measured in millions of dollars, the pipeline war's stakes are billions of dollars and the future of Russia’s economy.

Mystery Fires at Key Russian Gas Pipeline Underscore the Humbling of Russia’s Gazprom, Cash Cow of Putin Era | The New York Sun

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Mystery Fires at Key Russian Gas Pipeline Underscore the Humbling of Russia’s Gazprom, Cash Cow of Putin Era

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