We still do not know what caused the damage on the North Stream 1 pipeline and insurance companies are considering how to respond to potential claims which will likely amount to hundreds of millions of dollars Reuters reported on Monday.
Industry sources said it was unclear whether the major underwriters for the pipeline, Munich Re and syndicates within the Lloyd’s of London market, would renew its cover. If that is the case, the pipeline is less likely to be repaired leaving the prospect of North Stream 1 bringing gas to Europe in the future more distant.
Additionally, two sources said that if it turns out the damage on North Stream 1 was caused by an act of self-sabotage or of war, the underwriters might dispute any submitted as such factors are not covered by insurance. The sources further pointed to the fact that North Stream’s majority shareholder, Russian Gazprom, is subject to sanctions by the United States, UK and Canada as well as several European Union restrictions why a renewal of North Stream 1 cover would be challenging due to risks of tighter sanctions against Gazprom which would prevent paying claims.
One of the North Stream 1 shareholders, Dutch natural gas infrastructure company N.V. Nederlandse Gauine said it would assess the situation as soon as there was more clarity on the matter of cause of the pipeline disruption.
– We are in close contact with our European partners and the relevant government authorities, it added.
The stakes are not low as North Stream was built with 7.8 billion euros of investment
Claims have not been made for the damage to the pipeline, but Danish police said on 18 October that the disruption was caused by powerful blasts. Russian President Vladimir Putin accused the United States and its allies of blowing up the pipeline which was strongly dismissed by the White House as “ridiculous”, while American President Joe Biden said damage to North Stream was a deliberate act of sabotage. Although not directly blaming Moscow, the West has agreed that the damage to the pipeline was not an accident and French president Emmanuel Macron said that Nordic leaders had said it was still impossible to say who was behind the damage.
Source: https://sg.finance.yahoo.com/news/analysis-pipeline-blasts-leave-nord-154551586.html
