German insurers Allianz and Munich Re have renewed cover for the damaged Russia-controlled Nord Stream 1 gas pipeline, according to Reuters.
Insurance by two of Germany’s biggest companies is critical for any long-term future of the pipeline, which was the main route for Russian gas to Europe for a decade before the blast last September.
The insurance stands in contrast to Germany’s public stance of severing ties with Moscow, but one of the five sources said the German government had not opposed the cover. Most Western investors have written off their stakes in the pipeline.
Russia has a 51 percent stake in Nord Stream 1 through a subsidiary of the state-owned energy group Gazprom.
Some of Nord Stream’s German shareholders favor at least preserving the damaged pipeline in case relations with Moscow improve, two people familiar with the matter told Reuters separately.
One of the people said that Berlin tolerated such an approach to the infrastructure, even though it has said that energy ties with Russia are severed.
The insurance policy reportedly covers damage to the pipeline and business interruption issues. Having insurance would also facilitate any repair work needed to resume gas supplies under the Baltic Sea to Europe.
While the import of Russian crude oil and oil products is banned under European Union (EU) sanctions, Russian gas imports are allowed. The West, however, is trying to find alternatives.
Prior to Russia’s invasion of Ukraine last February, Nord Stream 1 was insured by multiple European underwriters including some from the Lloyd’s of London market.
Some Lloyd’s underwriters were believed to have cut insurance arrangements that came up for renewal in late 2022 in part because of UK sanctions imposed on an entity connected to Gazprom.
Three of the Lloyd’s syndicates previously involved in insurance cover were unlikely to have renewed their exposure, three of the insurance industry sources said.
Its underwriting syndicate from the Lloyd’s market continued to provide insurance for the project. They all declined to provide further details.
Customers often renew insurance contracts when their property is damaged and this is taken into account when agreeing the contract terms.
Nord Stream 1’s policy was a two-year contract which renewed after the first year. However, policy-holders and insurers can often break such a contract after the first year, depending on the terms.
Europe’s imports of Russian gas have fallen from around 40% of EU gas supply to less than 10% since Russia’s invasion of Ukraine began in February last year.
The economy ministry spokesperson said the aim was to stop using gas from Russia and elsewhere.
Russia showed everyone last year that it is not a reliable partner. We need more renewable energies and must become independent of fossil imports.
The stance represents a major shift from Germany’s previous whole-hearted support for Russian gas, in defiance of warnings from other EU countries and the United States.
Some German officials, politicians and others familiar with German government thinking told Reuters a minority still hoped Nord Stream 1 can be revived, even if few saw any prospect of that happening in the near future.