Gas wars deepen as Russia curbs supplies to more European buyers

‘Putin’s decision to cut gas deliveries to Denmark is pure blackmailing and completely unacceptable.’
Russian President Vladimir Putin. Image: Bloomberg

Russia cut off gas supplies to more European buyers, stepping up its use of energy as a weapon and sowing further division in the continent.

Gazprom PJSC halted pipeline shipments to the Netherlands and Denmark this week, and then surprised markets by also cutting off a small contract supplying Germany. Shell Plc and wind giant Orsted A/S refused to comply with President Vladimir Putin’s demand for payments to be made in rubles, and Gazprom responded by halting flows.

Russia is keeping its grip on the European Union’s gas market just as the bloc moved to impose its harshest energy sanctions so far in response to the invasion of Ukraine. Moscow has been sowing division in Europe for months by demanding payments in rubles for the key resource the continent can’t live without.

“Putin’s decision to cut gas deliveries to Denmark is pure blackmailing and completely unacceptable,” Danish Prime Minister Mette Frederiksen said on her Instagram account.

Some countries stood firm, refused to engage with the new terms that risked breaching the bloc’s own sanctions, and saw their gas cut off. Poland and Bulgaria were the first to go. Elsewhere, companies such as Italy’s Eni SpA and Germany’s Uniper SE instead scrambled to find a way to satisfy Putin’s demands without falling foul of sanctions. Their gas is uninterrupted.

Italian Prime Minister Mario Draghi said on Tuesday that Russia is treating individual countries differently. But a person familiar with Gazprom’s contracts told Bloomberg that the bloc’s top buyers have paid according to the new terms, and that after Shell and Orsted, no more companies will get cut off.

After weeks of wrangling over the terms, the pattern has emerged that major buyers of Russian gas found a way to keep paying, while smaller buyers with more alternatives — and in some cases a more hawkish approach to Moscow — refused to cave. About 20 billion cubic meters of gas supplies have been cut off, about 15% of Europe’s pipeline imports from Russia.

“This is clearly important but contracts with the majority of these buyers were either terminating this year anyway or are for relatively small volumes,” said Jonathan Stern, a distinguished research fellow at the Oxford Institute for Energy Studies. “The decisions of these buyers have not – yet – impacted the majority of Russian gas exports to Europe under long term contracts.”

The Danish cut comes just as the nation is set to vote on Wednesday on the EU military pact, a referendum the government has called in response to the invasion of Ukraine. Polls suggest the country, which has traditionally shunned deeper EU integration, will join and thereby move closer to the bloc.

Likewise, Finland saw its power exports from Russia cut two days after its leaders said they would back an application to join NATO, and gas flows ended three days after it submitted its application.

Gazprom’s export arm said on Wednesday it stopped sending gas to Shell Energy Europe, impacting supplies to Germany. The Russian gas giant also cut off Denmark’s Orsted on Wednesday and Dutch energy firm GasTerra BV on Tuesday.

Shell Energy Europe has a contract with Gazprom for gas supplies to Germany of as much as 1.2 billion cubic meters a year, according to the Russian exporter. That’s less than 0.8% of what the Russian company supplied to the European Union last year. Germany’s biggest Russian gas buyer is Uniper, which continues to receive Russian gas.

Shell said it will work to keep supplying customers in Europe through its “diverse portfolio of gas supply,” according to an emailed statement. The company “continues to work on a phased withdrawal from Russian hydrocarbons, in compliance with applicable laws and regulations.”

Orsted’s long-term contract is for 20 terawatt-hours a year, or about 1.9 billion cubic meters a year. While that’s just a fraction of EU’s gas imports, it accounts for more than 80% of the 24 terawatt-hours Denmark imported last year.

“We stand firm in our refusal to pay in rubles, and we’ve been preparing for this scenario,” Orsted chief executive officer Mads Nipper said in a statement. “The situation underpins the need of the EU becoming independent of Russian gas by accelerating the build-out of renewable energy.”


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If I buy a John Deere tractor from an American company, then I have to pay in dollars. If I buy a Fendt harvester from Germany, I have to pay in euros. If I buy gas from Russia, why am I unwilling to pay in Ruble?

If I took a hard line and demanded to pay in rand for my purchase of Havarti cheese from Denmark, will they bend over backward?

What is this issue about currency all about? Why are the Americans, Europeans, Chinese, and Russians fighting for the right to sell commodities in terms of their own respective currencies? Why are they willing to bomb each other for this privilege if it’s not a privilege?

Principles before bodies. Especially of innocent women and children.

He will not get it beachy, save your breath … comparing contractual breach as opposed to a having and believing in a conscience. It can be conceptually difficult for boffins to fathom.

End of comments.



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