Russia is about to shut off some of Germany’s gas
« Shell Energy Europe Limited has notified Gazprom Export LLC that it does not intend to make payments under the contract for the supply of gas to Germany in rubles, » Gazprom said in a statement on its Telegram account.
Gazprom said Shell would lose up to 1.2 billion cubic meters worth of annual gas supply — just a tiny fraction of the 95 billion cubic meters the country consumes each year, according to Germany’s economic ministry.
A spokesperson for the German government told CNN Business that it was « monitoring the situation very closely. »
« Security of supply is guaranteed, » the spokesperson added.
In March, Russian President Vladimir Putin threatened to cut gas deliveries to « unfriendly » countries that refused to pay in rubles, rather than the euros or dollars stated in contracts.
Since then, Gazprom has offered customers a solution. Buyers could make euro or dollar payments into an account at Russia’s Gazprombank, which would then convert the funds into rubles and transfer them to a second account from which the payment to Russia would be made.
But many European companies, including Shell Energy, have refused to comply.
« Shell has not agreed to new payment terms set out by Gazprom, » a Shell spokesperson told CNN Business on Tuesday. « We will work to continue supplying our customers in Europe through our diverse portfolio of gas supply. »
The Netherlands’ GasTerra similarly said in a Monday statement that it would not comply with Gazprom’s « one-sided payment requirements. »
Henning Gloystein, director of Energy, Climate and Resources at Eurasia Group, told CNN Business that the latest shut off does not represent a « major revenue loss » for Gazprom, given exports to Shell Germany accounted for less than 1% of Russia’s total exports to the European Union last year.
« By contrast, European energy firms that rely much more on Russian supply… have largely switched to Gazprom’s new payment mechanism in order to safeguard their operations, » he added.
— Inke Kappele, Anna Stewart and Robert North contributed reporting.
