Siemens Sought Turbine Export Permit for ‘Guidance’ From Ottawa on Russia Sanctions

A view shows a gas turbine at the gas trading company VNG AG in Bad Lauchstaedt, Germany, on July 28, 2022. Annegret Hilse/Reuters

An executive from the Montreal company that repaired a turbine for a Russian gas pipeline earlier this year says it sought an export permit to get “guidance” from Ottawa.

Controversy erupted this summer after Canada approved the delivery of the turbine to Germany, despite its simultaneous attempts to punish Russian companies during the invasion of Ukraine.

Siemens Energy Canada Ltd. says it halted its scheduled maintenance work on a turbine for the Nord Stream 1 pipeline, owned by Russian state-owned energy company Gazprom, when Canada imposed economic sanctions on Russia in March.

The company’s managing director, Arne Wohlschlegel, told a parliamentary committee that the company informed the RCMP about its situation as soon as the sanctions were put in place, “so I would assume that knowledge was shared with the government.”

Two months later, he said, the German government advised Siemens headquarters and the Canadian government that an energy crisis was unfolding in Germany that “would affect multiple countries in Europe.”

The Montreal subsidiary then filed for export permits that would exempt it from running afoul of Canada’s sanctions regime as a way to get “proper guidance” from Global Affairs Canada on whether to move ahead.

It did not lobby the government about the turbines, Wohlschlegel said, nor did it hire a consulting firm to do so.

Foreign Affairs Minister Mélanie Joly, who signed a two-year export permit in July, told the Foreign Affairs Committee earlier in its study of the controversy that Canada did so to ease Europe’s energy woes.

The government also considered the potential impact on jobs in Montreal, according to a memo for Joly that the government filed in court as part of its response to a legal challenge of the decision by the Ukrainian World Congress.

“We never stated that any jobs could be at risk,” Wohlschlegel said. And the work involved with the maintenance is “a fraction of a percent” of overall revenue in Montreal, he added.

Wohlschlegel said turbines must undergo maintenance at about every 25,000 hours of operation, or every three or four years.

The turbines sent to Montreal for repair were scheduled to have accumulated around that number of hours of use, he said, and the company’s facility in Montreal is the only place in the world where the turbines can be repaired.

Siemens delivered the first repaired turbine to Germany in July but the part has not been used, with Gazprom refusing to provide the necessary import documents to get it into Russia, he said.

The turbine would normally have been sent straight to Russia for use in a compression station there. Wohlschlegel said it was the company’s understanding that sending it to Germany instead was “the instruction from the Canadian government.”

He said he couldn’t answer questions about Gazprom’s evolving relationship with the company because while the work is happening in Montreal, the contracts are owned by a different Siemens Energy subsidiary in the United Kingdom.

And he said the firm has “no position” on whether Canada should revoke the permit for five more turbines that are sitting in Montreal, for which he said no work is currently underway.

At the end of the committee meeting, Conservatives gave notice that they will move to ask the committee to report back to the House of Commons urging the government to “immediately revoke” the additional permits.

The Nord Stream 1 pipeline, which is normally responsible for running a significant amount of natural gas to Europe from Russia, has ceased operating after a major rupture.

European Union leaders have said that leaks in the Nord Stream 1 and Nord Stream 2 pipelines were caused by deliberate acts of sabotage. Russia has denied any blame.

Russian President Vladimir Putin has threatened to cut off energy flows to Europe altogether if the West tries to put a price cap on Russian energy exports.