Gazprom cut off supplies to the two companies because they refused to convert their gas payments to rubles. The Russian company confirmed this on Wednesday.

According to the Russian state energy giant Gazprom, it has stopped supplying gas to the Danish utility Ørsted and Shell Energy Europe.

Gazprom cut off supplies to the two companies because they refused to convert their gas payments to rubles, the company announced on Wednesday. Germany is also affected by the delivery stop to Shell.

In its decision, Gazprom referred to a decree by Kremlin chief Vladimir Putin, according to which all buyers of Russian gas from so-called unfriendly countries, which Moscow sees as belonging to the EU countries, must convert their payments to rubles from April. Gazprom emphasized that business partners were informed about this change in good time. Shell and Ørsted had refused to pay in the Russian national currency. Energy supplies had previously been stopped for Poland, Bulgaria and Finland.

Putin’s Response to Sanctions

Kremlin chief Putin introduced the new payment system in response to Western sanctions in the wake of Russia’s war of aggression against Ukraine. The procedure stipulates that customers open a so-called K account with the Russian Gazprombank. There they can still pay their bills in euros or dollars, the bank converts the money into rubles and transfers it to Gazprom. The EU Commission does not consider the sanctions to have been violated as long as the companies transfer the amounts in euros or dollars – as stipulated in the contracts – to an account with Gazprom, and the transaction is then deemed to be completed.

Security of supply guaranteed

According to the Federal Ministry of Economics, the gas supply stop against Shell currently has no impact on the security of supply in Germany. “We are monitoring the situation very closely,” said a spokeswoman on request. The Federal Network Agency, as the responsible supervisory authority for gas supply in Germany, explained in its daily management report that the gas supply stop to Shell “only affects small quantities”. The Nord Stream 1 pipeline transported around four percent less gas on Wednesday than the day before. “These gas volumes are procured elsewhere,” said the authority.

Last year, Gazprom delivered 1.97 billion cubic meters of gas to Ørsted. This corresponds to two thirds of Danish gas consumption. Nevertheless, it was said from Copenhagen that there would be no supply bottlenecks. The contract with Shell Energy Europe provides for the delivery of up to 1.2 billion cubic meters per year to Germany. However, this is only a fraction of the amount of gas that is consumed in Germany as a whole.