Russia’s state-owned gas supplier, PJSC Gazprom has said it would halt gas supply to Denmark’s Orsted and Shell for its contract to supply gas to Germany after both parties refused to make payments in roubles – the Russian currency.
Investors King recalls that PJSC Gazprom stopped its gas exports to Finland, following the payment dispute between the two European countries.
The move by Gazprom comes after European Union leaders said they will block most Russian oil imports by the end of 2022 to punish Moscow for invading Ukraine. The gas company said it would continue to phase out Russian fossil fuels.
The EU ban will affect oil that arrives by sea – around two-thirds of imports – but not pipeline oil after Hungary opposed the decision.
In response to Western sanctions, Russia has already cut off gas supplies to Poland, Bulgaria, and the Netherlands, after the countries refused to comply with Russian demands to switch to payment in roubles.
The latest move expands that retaliation to Germany and Denmark.
President of the Russian Federation, Vladimir Putin’s decree has been seen as an attempt to boost the Russian currency, which has been hit by sanctions, as more foreign exchange demand for roubles is likely to increase demand and push up its value.
Shell Plc has now said it will work to keep gas flowing to its customers in Europe despite the decision by the Russian gas company and has also promised that it would continue to get gas from its other sources, as reported by a UK media outfit.
“It had not agreed to “new payment terms set out by Gazprom”, which included the creation of Russian bank accounts,” Shell stated in an interview with newsmen.
“We will work to continue supplying our customers in Europe through our diverse portfolio of gas supply,” according to its spokesman.
“Shell continues to work on a phased withdrawal from Russian hydrocarbons, in compliance with applicable laws and regulations.”
Meanwhile, Orsted said on Monday that Gazprom stopping gas flows would put Denmark’s supplies at risk.
Shell has taken a hit of $5bn (£3.8bn) from offloading its Russian assets as part of its plans to withdraw sever ties with the country. It also confirmed it had quit its joint ventures with Gazprom.
The firm pledged in April to no longer buy oil from Russia but said contracts signed before the invasion of Ukraine would be fulfilled.
Recall also that Investors King reported that the EU’s decision to ban the Russian oil led to an increase in the price of crude oil from which Nigeria is expected to benefit from.
Crude oil prices rose above $120 a barrel on Monday as traders awaited the decision of the EU concerning Russian crude oil sanctions.