- Gazprom said it would stop supplying natural gas to Shell, which supplies Germany.
- The suspension from June 1 is due to Shell’s refusal to pay for supplies in rubles, Gazprom said.
- On March 31, Russian President Putin demanded that natural gas payments be made in rubles.
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Russian energy giant Gazprom will 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 natural gas payments be made in rubles, which would involve opening an account in euros and rubles in the country’s Gazprombank to process payments.
Shell Energy Europe has notified Gazprom “that it does not intend to make payments under the contract for the supply of gas to Germany in rubles,” Gazprom told its Telegram channel.
“At the end of the working day of 31 May (the payment deadline stipulated in the contract), Gazprom Export had not received payment from Shell Energy Europe Limited for the gas supply in April,” the Russian company wrote.
“Gazprom Export notified Shell Energy Europe Limited of the suspension of the gas supply under this contract from June 1, 2022,” the Russian company continued until payment is made in rubles.
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.
Although Shell has refused to pay Gazprom in rubles, major German natural gas importers Uniper and DWE have paid for Russian fuel according to Moscow’s new payment plan, Reuters reported on Tuesday.
Uniper is the largest importer of Russian gas in Germany. According to Bloomberg, it depends on Russia for more than half of its natural gas needs. The German energy giant is also the largest gas import and storage company in the country, according to the media.
Potential for a “significant recession”
Germany could fall into a “major recession” if it cuts off Russian natural gas and oil supplies, a top banker said in April. Economic power depends heavily on Russian gas, which accounted for 55 percent of Germany’s gas imports in 2021 and 40 percent of its gas imports in the first quarter of 2022, Reuters reported.
The German Ministry of Economy did not immediately respond to Insider’s request for comments sent outside normal business hours. A German government spokesman told CNN on Tuesday that he was “following the situation very closely”.
Shell told Insider that it “has not accepted the new payment terms set by Gazprom.” The energy giant has also not opened any special account to process payments in rubles.
“We will work to continue to supply our customers in Europe through our diverse gas supply portfolio,” Shell said in a statement.
On Tuesday, Gazprom said it had completely suspended gas supplies to GasTerra due to the Dutch trader’s “non-payment in rubles”.
In neighboring Denmark, the Orsted power company also warns of a cut in Gazprom’s natural gas supply, as it also refuses to pay in rubles. The Orsted ruble was due to be paid on Tuesday.
Gazprom has already cut off gas supplies to Poland, Bulgaria and Finland, all of which have refused to pay in Russian currency.