Energy & Environment

Russia expands Europe gas supply cutoffs

Gazprom flag against a sky. Gazprom is oil and gas company. Krasnodar region, Russia – August 22, 2020.

Russia is cutting off additional supplies of natural gas to Europe — this time impacting countries including Germany —  as the continent moves ahead with its own ban on Russian oil. 

Russian company Gazprom said in Telegram posts on Tuesday that it would cut off gas supplied under a contract with Shell to Germany and under a contract with Danish company Ørsted and Dutch company GasTerra BV.

The cutoffs come after the three companies failed to comply with Russia’s new requirement to pay for gas in Russian rubles, Gazprom said. 

The announcements represent an escalation in an ongoing energy battle between Russia and Europe as the European Union and its allies continue to sanction Russia over its invasion of Ukraine.

A number of countries, including the U.S., have banned Russian oil. On Monday, the European Union agreed to an embargo of most of Russia’s oil imports by the end of the year. 

The companies all said in statements that they would purchase gas from elsewhere.

Shell spokesperson Curtis Smith said via email that the company has “access to a diverse portfolio of gas from which we will continue to supply our customers in Europe.”

Ørsted CEO Mads Nipper said the company has been “preparing for this scenario, so we still expect to be able to supply gas to our customers.” Nipper said that there is no gas pipeline that goes directly between Russia and Denmark, so Russia would not be directly cutting of the country’s supply.

GasTerra said it “has anticipated this by buying gas from other providers” but also said that it is “impossible to predict” whether the European market can absorb the lost supply without serious consequences.

GasTerra also said it would not meet Russia’s demand to pay in rubles because doing so “would risk breaching sanctions imposed by the EU” and cause “financial and operational risks,” such as government control of accounts in Russia. 

Meanwhile, Ørsted said in a statement that it was  “under no obligation” under its contract to pay in rubles and “will continue to pay in euros.”

Tags Denmark EU Europe Gasterra BV Gazprom Germany russian invasion of ukraine Russian oil Shell Oil ukraine

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