Europe approached an energy crisis on Tuesday after the Kremlin cut off gas supplies to major buyers, including Shell.
Russia’s state-owned gas supplier, Gazprom, said supplies to Shell in Germany, as well as to Ørsted in Denmark, would be cut off on Wednesday after they refused to comply with Putin’s demands to pay in rubles.
Gazprom cut off supplies to the Netherlands on Tuesday after doing the same for Poland, Bulgaria and Finland this month, arming gas amid its war in Ukraine.
FTSE 100 Shell produces fossil fuels itself, but also has a large sales division that buys and sells gas from companies such as Gazprom.
In March, the company said it planned to withdraw from participating in Russia’s energy sector “in stages”. She is now forced to leave the market immediately.
In response to Gazprom’s statement, Shell said on Tuesday: “Shell has not agreed to new payment terms set by Gazprom.
“We will work to continue to deliver to our customers in Europe through our diverse gas supply portfolio.
“Shell continues to work on the phasing out of Russian hydrocarbons in accordance with applicable laws and regulations.”
Shell’s contract, cut by Gazprom, includes a maximum of 1.2 billion cubic meters of gas a year supplied to Germany so that Shell can sell where it is needed.
The EU imported about 155 billion cubic meters of gas from Russia in 2021, representing about 40% of gas consumption.
Last month, the Kremlin ordered buyers in “unfriendly” countries to pay for gas in rubles, seen as revenge for sanctions and efforts to isolate Moscow over its war with Ukraine.
Most of Gazprom’s contracts with European buyers remain in force after finding ways to meet demand, with the cut-off estimated at less than 20 billion cubic meters.
Ørsted said on Tuesday that its supplies from Gazprom would be cut off at 6am on Wednesday.
Mads Nipper, CEO, said the company “stands still[s] firmly in our refusal to pay in rubles.
He added that since there is no direct gas pipeline between Russia and Denmark, Russia cannot cut off the country, but Denmark will have to buy more on the European market.
Mr Nipper said: “We expect this to be possible.
“We are in constant dialogue with the authorities and we believe that the authorities, which have a comprehensive overview of the supply situation in Denmark, are prepared for the situation.
James Huxtep, manager of European gas analysis at S&P Global Platts, said efforts to replace Russian supplies were supported by lower demand in Asia due to the blocking of Covid and other factors, although things will become more difficult by the end of the year. the year.
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