Europe faces ‘scary situation’ following mysterious pipeline leaks, former US regulator says

New York CNN Business —
The apparent sabotage of the Nord Stream pipelines running from Russia underscore Europe’s massive energy vulnerabilities, former US energy regulator Neil Chatterjee told CNN.
“It’s a scary situation. They are basically hoping and praying for a mild winter,” Chatterjee, a former commissioner and chairman of the Federal Energy Regulatory Commission, said in a phone interview. “That’s a risky, risky place to be.”
US and Western officials have said the unexplained explosions and leaks in Nord Stream 1 and Nord Stream 2 bear the hallmarks of sabotage. Neither pipeline was currently in operation, but the incident raises further questions about Europe’s supply of energy.
“These leaks kill whatever hope there was that this pipeline could help get them through this winter. This is not an escape hatch for our European allies,” said Chatterjee, who is now a senior advisor at the law firm Hogan Lovells. “This will be a problem for several winters ahead.”
European natural gas futures spiked this week on the pipeline explosion, though they have since pulled back from their highs. Still, energy prices have reached crushing levels that risk driving the European economy into a recession.
‘So dangerous’
In recent years, Europe has shut down coal-fired power plants and nuclear plants as well, leaving it more dependent on natural gas from Russia.
But after Russia invaded Ukraine, European officials canceled plans for Nord Stream 2, a pipeline that was set to deliver vast amounts of gas to Western Europe. And then this summer, Russia cut off gas flows through Nord Stream 1, apparently in retaliation for tough Western sanctions.
Chatterjee declined to say who might be behind the pipeline explosions nor what their motivations are, though he conceded it’s “very clear” Russian President Vladimir Putin has been “weaponizing gas.”
“This is yet another example of why it’s so dangerous to not only be tethered to a potential adversary but to have limited optionality,” he said.
Russia has denied striking the pipelines, calling the accusation “predictably stupid and absurd.” Moscow has also launched its own investigation.
‘Existential battle’
Still, some on Wall Street believe Putin’s fingerprints are all over the mysterious pipeline explosions.
“We view this week’s likely subsea sabotage of the Nord Stream 1 and 2 pipelines as a possible warning shot to the West that no infrastructure is safe and that the Russian leader is prepared to adopt a ‘burn it all to the ground’ strategy to try to get the West to relinquish its support for Ukraine and sanctions,” Helima Croft, head of global commodity strategy at RBC Capital Markets, wrote in a note to clients.
Croft, a former CIA analyst, warned the risk of additional Russian-driven energy supply disruptions remains at “DEFCON 3 levels,” including potentially withholding the country’s oil exports.
“We think more asymmetric, disruptive acts are coming as we head into winter,” Croft wrote. “This appears to be an existential battle for the Russian leader, and defeat in Ukraine could have potentially very adverse implications for his professional and personal security.”