Russia cuts gas to Germany

Gazpromthe Russian oil company announced on May 31 that it would suspend gas exports to Shell from June 1 due to the company’s failure to pay in Russian rubles.

“Shell Energy Europe Limited has informed Gazprom Export LLC that it does not intend to pay under the gas supply contract to Germany in rubles,” Gazprom announced on its Telegram account.

Gazprom says Shell will lose up to 1.2 billion cubic meters of gas supply annually – just a tiny fraction of the 95 billion cubic meters Germany consumes each year, according to the German Economy Ministry.

However, as CNN points out, Gazprom’s move still has the potential to shake up the German industry, which relies heavily on Russian gas. Europe’s largest economy has worked to reduce the proportion of Russian gas imports from 55% before the Ukraine war to 35%.

A German government spokesman said it was “monitoring the situation very closely”. “Security of supply is guaranteed,” the spokesman added.

Gazprom’s announcement to suspend gas supplies to Shell comes just a day after the Russian oil company announced the suspension of gas supplies to the Danish energy company Ørsted and the Dutch gas trader GasTerra and GasTerra. weeks after Russia stopped supplying gas to Poland, Bulgaria and Finland.

In March, Russian President Vladimir Putin threatened to cut off gas to “unfriendly” people who refused to pay in ruble.

Since then, Gazprom has offered gas customers the solution to pay in euros or USD into an account at Gazprombank to convert the money into rubles and from there to a second account for payments to Russia.

However, many European companies, including Shell Energy, have refused to comply.

“Shell disagrees with the new payment terms introduced by Gazprom. We will work to continue providing customers in Europe through our diversified gas supply portfolio” – developer Shell’s language shared with CNN.

Similarly, the Netherlands’ GasTerra also confirmed that it would not comply with Gazprom’s “one-sided payment requests”.

Henning Gloystein, Director of Energy, Climate and Resources at Eurasia Group, said that this gas shutdown does not cause “big loss in revenue” for Gazprom because exports to Shell Germany account for less than 1%. Russia’s total exports to the European Union (EU) last year.

“In contrast, European energy companies that are more dependent on Russian supplies have largely turned to Gazprom’s new payment mechanism to protect their operations,” he said.