A view of the disturbance in the water above the Nord Stream gas leak in the Baltic Sea. AP.
A view of the disturbance in the water above the Nord Stream gas leak in the Baltic Sea. AP.
A view of the disturbance in the water above the Nord Stream gas leak in the Baltic Sea. AP.
A view of the disturbance in the water above the Nord Stream gas leak in the Baltic Sea. AP.

What do we know about the Nord Stream pipeline explosions?


Gillian Duncan
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A suspected underwater sabotage attack off Europe's shores in September left politicians, security officials and scientists looking for answers to the mystery of what caused two majority Russian-controlled pipelines to leak gas into the Baltic Sea.

Underwater blasts which rattled the Baltic seabed shortly before the pipeline leaks led to the suspicion of sabotage.

The tremors were picked up by scientists in Germany, Denmark and Sweden, who described two separate spikes on their seismographs.

Denmark’s geological survey indicated they were man-made and matched the locations where leaks were reported on the Nord Stream pipelines.

Picture provided by Swedish Coast Guard shows a leak from Nord Stream 2 on September 28, 2022. AP
Picture provided by Swedish Coast Guard shows a leak from Nord Stream 2 on September 28, 2022. AP

“This is not our activity,” Defence Minister Oleksiy Reznikov told reporters in Stockholm on Tuesday, before a meeting with EU defence ministers.

Ukrainian presidential adviser Mykhailo Podolyak also tweeted that “Ukraine has nothing to do with the Baltic Sea mishap and has no information about 'pro-Ukraine sabotage groups'.”

A separate German investigation has not ruled out the possibility of a “false flag” attack by Russia to blame Ukraine.

Authorities in Sweden and Denmark have also opened investigations into the incident.

What do we know about what actually happened?

The pipelines were ruptured by subsea explosives on September 26 last year, seven months after Russian forces invaded Ukraine.

Several leaks were reported in both Nord Stream 1 and Nord Stream 2, in Danish and Swedish waters. The gas bubbling at the surface could be seen from space.

Satellite image shows gas from the Nord Stream pipeline bubbling up in the water following incidents in the Baltic Sea. Reuters
Satellite image shows gas from the Nord Stream pipeline bubbling up in the water following incidents in the Baltic Sea. Reuters

According to a German investigation, a group of five men and one woman carried out the attack and used professionally- falsified passports to cover their tracks.

The boat used by the group has been identified and it is believed to have set sail from the north German port of Rostock on September 6 last year, landing the following day on the Danish island of Christianso.

Traces of explosives were later found by investigators as the team returned the boat with having cleaned up.

What was the impact?

The attack benefited Ukraine by severely damaging Russia's means of reaping millions by selling natural gas to Western Europe.

But it added to the pressure of high energy prices on key Ukrainian allies in Europe, particularly Germany.

Three weeks after the leaks were discovered, gas prices, which had already soared following Russia's invasion of Ukraine, jumped a further 8 per cent.

The wholesale cost of energy has since fallen, although it remains higher for consumers than before Russia's invasion of Ukraine.

The blast also had a significant environmental impact.

The pipelines were estimated to have contained 300,000 tons of methane and it is believed to be one of the largest single releases of methane in history, equivalent to one and a half days of global emissions.

Who did it?

A blog post by an award-winning US political writer in February claimed the US was behind the Nord Stream gas pipeline explosions, an accusation the White House described as “utterly false and complete fiction”.

And now, a New York Times report claims US officials have seen new intelligence that indicates a “pro-Ukrainian group” was responsible.

It suggested the perpetrators behind the sabotage were “opponents of President Vladimir Putin of Russia”, and probably Ukrainian or Russian citizens.

The report said US officials had no evidence implicating Ukrainian President Volodymyr Zelenskyy, and that it may have been carried out “off the books” by a proxy force with connections to the Ukrainian government or its security services.

Ukraine has denied any involvement in the operation.

Will the pound fall to parity with the dollar?

The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.

Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.

New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.

“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.

The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.

The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.

Bloomberg

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Updated: March 08, 2023, 1:23 PM