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1 Jun, 2022 06:49

Russia cuts gas to another EU state

The move came as Denmark’s largest power company and Shell Energy in Germany refused to pay for supplies in rubles
Russia cuts gas to another EU state

Denmark has become the fifth country to be cut off from Russian natural gas following the refusal of its biggest power wholesaler, Orsted, to pay for deliveries in rubles. Supplies to Shell Energy Europe Limited in Germany have also been halted for the same reason, Russian energy giant Gazprom announced on Wednesday.

As of the end of the business day on May 31, Gazprom Export had not received payment for gas supplies in April from Orsted Salg & Service,” the Russian company explained in a statement.

It added that in 2021, Gazprom Export supplied the Danish company with 1.97 bcm of gas, which amounted to about two thirds of total gas consumption in Denmark.

The contract between Gazprom Export and Shell Energy Europe Limited for the supply of gas to Germany provides for a volume of up to 1.2 bcm of gas per year,” Gazprom said. 

Shell accounts for just 2.6% of the 95 bcm of natural gas Germany consumes each year.

Shell continues to work on a phased withdrawal from Russian hydrocarbons,” the company told the BBC.

Most of Germany’s larger gas buyers, including Uniper and RWE, have agreed to the Kremlin’s ruble payment scheme.

Russia’s new payment mechanism requires gas buyers from “unfriendly” countries that have placed sanctions on Moscow to open accounts in Russia’s Gazprombank. They can then deposit funds in their currency of choice, which the bank converts to rubles and transfers to the Saint Petersburg energy giant. 

The Russian energy giant recently suspended gas exports to Bulgaria, Poland, Finland and the Netherlands after they refused to comply. According to the Russian Energy Ministry, about two dozen European companies have so far opened ruble accounts.