Relief in Europe as Russia restarts Nord Stream 1. But it's not out of the woods yet

London(CNN Business) Europe can breathe a sigh of relief — for now.

Russia restarted natural gas deliveries along the Nord Stream 1 pipeline on Thursday, allaying fears that it would keep the taps turned off. That would have plunged the bloc into an energy crisis — and several of its countries into a recession.

The pipeline, which delivered about 35% of Europe's total Russian gas imports last year, had been shut for 10 days for routine maintenance work.

Officials had worried that Gazprom, Russia's state energy company, would use the opportunity to drastically cut its supply of gas to the bloc in retaliation for sanctions imposed on Moscow since its invasion of Ukraine in February.

Europe's fears were well-founded. In recent weeks, Russia has stopped shipping gas to several European countries and energy companies over their refusal to meet its demands to pay in rubles.

But gas was flowing through Nord Stream 1 at 40% of its total capacity on Thursday morning, a spokesperson for the German government told CNN Business. That's the same level as before the pipeline shut for maintenance. The previous month, Russia had slashed deliveries by two-thirds, blaming the West for withholding vital turbines because of sanctions.

Those turbines are now on their way back to Russia, according to a Thursday note from research firm Eurasia Group.

The news that Russia had restarted shipments brought some comfort to European gas markets on Thursday.

Benchmark prices, which have soared 70% since the war began, fell back nearly 5% to hit €148 ($151) per megawatt hour, according to data from the Intercontinental Exchange.

Yet the prospect of a complete shut off of Russian gas has not gone away. The European Union sees this as a likely scenario, and has drawn up emergency plans to survive the winter should Moscow do so.

Maximizing revenues

Europe was by far the biggest buyer of Russian gas last year, according to the US Energy Information Administration.

As such, the Kremlin may want to continue collecting revenues while it still can, before the bloc dramatically cuts its imports.

In May, the European Union pledged to slash its consumption by 66% before the end of the year, and break its dependence completely by 2027.

"One key inventive for Russia therefore is to keep the gas flowing for now to maximize dollar/euro revenues before the trend away from Russian gas gets underway in earnest," Kaushal Ramesh, senior analyst for gas and LNG at Rystad Energy, told CNN Business.

Soaring natural gas prices have also been a boon for Moscow. The International Energy Agency (IEA) said earlier this week that, since the invasion, revenues for oil and gas exports to Europe had doubled compared to the average of recent years, hitting $95 billion.

"The increase in Russia's oil and gas export revenues in just the last five months is almost three times what it typically makes from exporting gas to Europe over an entire winter," Fatih Birol, executive director of the International Energy Agency, said in a Monday press release.

But Russia has also weaponized energy before, and could do so again as the war approaches its sixth month.

Eurasia Group expects a 40% drop in Russian gas flows to Europe for the whole of 2022.

"Even if Nord Stream 1 returns to normal levels, Moscow may cut supply elsewhere, possibly through the pipelines transiting Ukraine," it said in its note.

"This strategy is probably aimed at inflicting economic damage on Europe in retaliation for its sanctions while still generating revenue for Moscow."

Europe still in danger

The prospect of a total shut off of Russian gas is a "likely scenario," according to EU Commission President Ursula von der Leyen.

Such a move would spell disaster for the region as it tries to fill its gas storage facilities ahead of the winter. Stores are currently close to 65% of their capacity. That's still a way off the 80% target the bloc has set for countries to reach by November.

"Russia is calculatedly trying to put pressure on us by reducing the supply of gas," von der Leyen said at a Wednesday press conference to unveil the Commission's new emergency gas rationing plan.

In the plan, officials have proposed a voluntary target for its 27 member states to reduce their gas demand by 15% between August and March next year.

The Commission also hopes to pass a new law that would give it the power to impose mandatory gas reduction targets on states during times of severe shortages.

Europe has already managed to whittle down Russia's share of its gas supply from 40% last year to just 20% in June, according to economics think tank Bruegel. Germany, the bloc's biggest economy, has cut Russia's share of its gas imports to 35% from 55%.

The bloc has raced to find replacements, signing new supply deals and ramping up output from Norway and imports of liquefied natural gas (LNG).

But the situation in Europe remains "perilous," according to Birol.

The IEA said earlier this week that Europe must find ways to save 12 billion cubic meters of gas — equal to about 3% of its annual consumption — over the next 12 weeks to avert severe difficulties.

"This winter could become a historic test of European solidarity — one it cannot afford to fail," he said.

— Irene Nasser contributed reporting.