- Gazprom has said it will cut off natural gas supplies to Shell, which supplies Germany.
- The June 1 suspension was due to Shell’s refusal to pay for deliveries in rubles, Gazprom said.
- On March 31, Russian President Putin demanded that payments for natural gas be made in rubles.
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Russia’s energy giant Gazprom is ready to cut off natural gas supplies to Shell, which supplies fuel to Germany, Europe’s largest economy. The move comes after Shell refused to pay Gazprom in rubles.
Gazprom made the announcement on Tuesday, the same day it cut off natural gas supplies to the Netherlands for the same reason.
In a March 31 decree, Russian President Vladimir Putin demanded that payments for natural gas be made in rubles, which would lead to the opening of a euro and ruble account in the country’s Gazprombank for processing payments.
Shell Energy Europe has informed Gazprom that it “does not intend to make payments under the gas supply contract for Germany in rubles,” Gazprom told its Telegram channel.
“As of the end of the business day on May 31 (payment deadline stipulated in the contract), Gazprom Export has not received payment from Shell Energy Europe Limited for gas supplies in April,” the Russian company wrote.
Gazprom Export has notified Shell Energy Europe Limited of the suspension of gas supplies under this agreement from June 1, 2022 – until the payment in rubles, the Russian company continued.
Gazprom supplies up to 1.2 billion cubic meters of natural gas a year to Shell. This is only 2.6% of the 95 billion cubic meters of natural gas that Germany consumes each year, according to the country’s economy ministry.
While Shell refused to pay Gazprom in rubles, major German natural gas importers Uniper and DWE have paid for Russian fuel under Moscow’s new payment plan, Reuters reported on Tuesday.
Uniper is the largest importer of Russian gas in Germany. It depends on Russia for more than half of its natural gas needs, according to Bloomberg. The German energy giant is also the country’s largest gas import and storage company, according to media reports.
Potential for “significant recession”
Germany could fall into a “significant recession” if supplies of Russian natural gas and oil are cut off, a senior banker said in April. The economic plant is heavily dependent on Russian gas, which accounts for 55% of Germany’s gas imports in 2021 and 40% of gas imports in the first quarter of 2022, Reuters reported.
The German Ministry of Economy did not immediately respond to Insider’s request for comment sent outside regular business hours. A spokesman for the German government told CNN on Tuesday that he was “monitoring the situation very closely.”
Shell told Insider that it “did not agree to the new payment terms set by Gazprom.” The energy giant has also not opened special accounts for processing payments in rubles.
“We will work to continue to deliver to our customers in Europe through our diversified gas supply portfolio,” Shell said in a statement.
On Tuesday, Gazprom said it had cut off gas supplies to GasTerra altogether due to a Dutch trader’s “non-payment in rubles.”
In neighboring Denmark, energy company Orsted is also warning of a halt to Gazprom’s natural gas supplies as it also refuses to pay in rubles. Orsted’s payment in rubles was due on Tuesday.
Gazprom has already cut off gas supplies to Poland, Bulgaria and Finland as they all refused to pay in Russian currency.
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