Russian Gazprom cuts off natural gas to Germany after Shell refuses to pay for it in rubles


  • Gazprom said it cut off its supply of natural gas to Shell under a contract that supplies the fuel to Germany
  • The suspension from June 1 is due to Shell’s refusal to pay for supplies in roubles, Gazprom said.
  • On March 31, Russian President Putin demanded that payments for natural gas be made in rubles.

Russian energy giant Gazprom said it completely cut off supplies of natural gas to Shell under a contract that supplies fuel to Germany, Europe’s biggest economy. This decision came after Shell refused to pay Gazprom in rubles.

Gazprom made the announcement on Wednesday, a day after cutting off natural gas supplies to the Netherlands for the same reason.

In a March 31 decree, Russian President Vladimir Putin demanded that natural gas payments be made in rubles, which would involve opening a euro and ruble account with the country’s Gazprombank to process payments. .

Gazprom said on its Telegram channel on Tuesday that Shell Energy Europe had notified Gazprom “that it does not intend to make payments under the contract to supply gas to Germany in roubles”.

“As of the end of the working day of May 31 (the payment deadline stipulated by the contract), Gazprom Export had not received payment from Shell Energy Europe Limited for gas deliveries in April,” the Russian company wrote. .

“Gazprom Export has notified Shell Energy Europe Limited of the suspension of gas deliveries under this contract from June 1, 2022” — until payment is made in rubles, the Russian company continued.

Contracts for Russian gas to Europe transported by pipelines are usually denominated in euros, according to the Financial Times.

Gazprom supplies up to 1.2 billion cubic meters of natural gas per year to Shell. That’s just 1.3% of the 95 billion cubic meters of natural gas Germany consumes each year, according to the country’s economy ministry.

While Shell refused to pay Gazprom in roubles, Germany’s major natural gas importers Uniper and DWE paid for Russian fuel under Moscow’s new payment plan, Reuters reported on Tuesday.

Uniper is the largest importer of Russian gas into 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 the outlet.

Potential for a “significant recession”

Germany could slide into a “significant recession” if Russian natural gas and oil supplies were cut off, a top banker said in April. Economic power is heavily dependent on Russian gas, which accounted for 55% of Germany’s gas imports in 2021 and 40% of its gas imports in the first quarter of 2022, Reuters reported.

Germany’s economy ministry did not immediately respond to Insider’s request for comment sent outside normal business hours. A German government spokesperson told CNN on Tuesday that it was “monitoring the situation very closely.”

Shell told Insider that it “has not accepted the new payment terms set out by Gazprom.” The energy giant also did not open special accounts to process ruble payments.

“We will work to continue to supply our customers in Europe through our diversified gas supply portfolio,” Shell added in a statement.

Tuesday, Gazprom said it had completely suspended gas deliveries to GasTerra due to the Dutch trader’s “default of payment in roubles”. On Wednesday, the Russian gas company said it had also cut off gas supplies from Danish electricity company Orsted because it too refused to pay in roubles.

Gazprom previously cut gas supplies to Poland, Bulgaria and Finland because they all refused to pay in Russian currency.


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