Russia widens gas cuts in Europe and halts Dutch, Danish and German contracts


A 3D printed gas pipeline is placed in front of the Gazprom logo displayed in this illustration taken February 8, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

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  • Gazprom says it cut supplies to GasTerra, Orsted and Shell
  • Russians cite refusal to pay in rubles
  • Move one day after EU agrees to cut Russian oil imports
  • Gas prices in Europe increase by 5%

May 31 (Reuters) – Russia widened its gas cuts to Europe on Tuesday, with Gazprom (GAZP.MM) saying it would cut off supplies to several “unfriendly” countries that refused to accept the payment system rubles against Moscow gas.

The move by the Russian gas giant is the latest in retaliation for Western sanctions imposed on Moscow after it invaded Ukraine on February 24, intensifying its economic battle with Brussels and driving up gas prices in Europe. Read more

Gazprom said on Tuesday it had completely cut off gas supplies from Dutch gas trader GasTerra. Read more

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He then said he would also stop gas flows to Denmark’s Orsted (ORSTED.CO) and to Shell Energy (SHEL.L) from June 1 for its contract to supply gas to Germany, after both did not make ruble payments. Read more

The announcements follow Monday’s agreement by European Union leaders to cut imports of Russian oil from the European Union by 90% by the end of the year, the bloc’s toughest response to the invasion. Read more

NO THREAT TO SUPPLY

GasTerra, which buys and trades gas on behalf of the Dutch government, said it had contracted elsewhere for the 2 billion cubic meters (bcm) of gas it expected to receive from Gazprom until October.

“This is not yet considered a threat to supply,” said economy ministry spokesman Pieter ten Bruggencate.

Orsted, who also said there was no immediate risk to Denmark’s gas supply, said on Tuesday he would look to the European gas market to fill the void. Read more

“Gas destined for Denmark must, to a greater extent, be purchased on the European gas market. We hope this will be possible,” Orsted chief executive Mads Nipper said in a statement shortly after the announcement. of Gazprom.

The benchmark first-month gas contract rose around 5% on Tuesday afternoon to around 91.05 euros/MWh, but remained well below highs of over 300 euros/MWh reached in early March.

“While the market widely expected both companies to be cut, this development will make the balance between supply and demand all the tighter,” said ICIS analyst Tom Marzec- Manser on Twitter.

Russian gas flows to Germany through the Nord Stream pipeline fell on Tuesday, which analysts said was likely due to the Dutch cut. Read more

Moscow had already cut off natural gas supplies to Bulgaria, Poland and Finland citing their refusal to pay in Russian rubles, a request made in response to Western sanctions that isolated Russia. Read more

German, Italian and French companies, however, said they would engage in the program to maintain supply. Read more

Supply cuts have pushed up already high gas prices, fueling inflation and prompting European governments and companies to seek alternative sources and the infrastructure to manage them, including floating storage and regasification units (FSRU).

STORAGE

Europe has rushed to fill its gas storage sites before winter, wary of supply cuts from Russia, which typically supplies around 40% of Europe’s gas. Read more

Dutch gas storage is now around 37% full, according to data from Gas Infrastructure Europe.

The Dutch government announced last week that it would increase subsidies to 406 million euros to encourage companies to fill the Bergermeer facility, one of the largest open-access gas storage facilities in Europe.

Danish gas storages are currently 55% full and will be able to supply all Danish and Swedish gas customers for five months if supplies from Germany are interrupted, according to a letter from Danish Energy Minister Dan Jorgensen to Parliament .

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Reporting by Toby Sterling and Anthony Deutsch in Amsterdam; Jan Strupczewski and Philip Blenkinsop in Brussels; Stine Jacobsen in Copenhagen; Susanna Twidale and Marwa Rashad in London; written by Jason Neely, edited by Carmel Crimmins and Tomasz Janowski

Our standards: The Thomson Reuters Trust Principles.


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