The Russian energy giant Gazprom is gradually withdrawing from its deals with Europe. The group is actually playing to the West.
Because of the war in Ukraine, which has been going on for more than 100 days, the EU has issued a partial embargo on Russian oil supplies. For the time being, the energy resource can only be delivered to Europe via pipelines. But even that should soon be over.
Russia, in turn, is turning the gas tap. The Russian energy giant Gazprom has already announced that it will no longer supply several countries and corporations with gas. Poland, Bulgaria, Finland, the Netherlands and the Danish utility Ørsted as well as Shell Energy Europe are already affected. If the ruble does not roll, gas does not flow. Putin had already mentioned this as a condition in the spring – and the countries mentioned do not pay in Russian currency. That would violate the sanctions rules of the EU.
This means massive losses for Gazprom. As the group announced on Telegram, within the last five months it has delivered a good quarter less gas to countries outside the former Soviet Union than in the same period last year. From January to May, 61 billion cubic meters were exported – 27.6 percent or 23.2 billion cubic meters less than a year earlier.
Shell refuses to accept Gazprom’s new terms
In order to somehow keep Western customers, Russia has introduced a procedure that allows companies and states to pay their bills in dollars or euros. What is needed is a so-called K-account with the Russian Gazprombank, which then converts the payments into rubles and transfers them to Gazprom. K-accounts did not violate EU sanctions and are therefore allowed.
Unfortunately for Gazprom, not every company that imports gas from Russia in bulk is willing to take on the K-account deal. For example, the Shell group refuses to use the process. “Shell has not agreed to Gazprom’s new payment terms, including K-accounts,” said a spokeswoman for Gazprom Germania star-Request with. In principle, Gazprom wants to continue to supply customers in Europe with gas. But: “Shell continues to work on a gradual withdrawal from Russian hydrocarbons.” According to the current contracts with Gazprom, Shell will receive an annual gas supply of up to 1.2 billion cubic meters. How the Russians want to compensate for the loss of this delivery, they did not answer.
This has hardly any consequences for Germany, because Shell’s supply accounts for only a fraction of Germany’s total natural gas consumption, which according to Statista calculations is around 87 billion cubic meters a year. This in turn accounts for 21.6 percent of the total energy supply. 90 percent of it has to be imported. At almost 40 percent, the majority of gas imports come from Russia. This is followed by Norway (34.8 percent), the Netherlands (22.4 percent) and other sources (4.6 percent).
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 at the request of the German Press Agency. The Federal Network Agency, as the supervisory authority responsible for gas supply in Germany, explained in its daily status 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 quantities of gas that have been lost will be procured elsewhere,” the authority said.
Other companies are accepting new rules
And Shell is far from the only energy supplier in Germany. For example, the energy companies RWE and Uniper continue to purchase gas from Russia. Unlike Shell, they did not turn down the payment option via the K accounts and paid their due bills “in accordance with the sanctions”. An RWE spokeswoman confirmed to the “Rheinische Post” that the company had transferred the amount in euros to an account at Gazprom Bank. A Uniper spokesman said the same thing. “Like other German and European companies before it, Uniper has changed the payment method for gas deliveries from Russia. Uniper pays in euros in accordance with the new payment mechanism. The first of these payments took place at the end of May,” he told the “Rheinische Post”. The procedure was coordinated with the federal government and follows the EU guidelines. Uniper is the largest German importer of gas from Russia.
The delivery stop is also judged to be less problematic in Denmark. In 2021, Gazprom delivered 1.97 billion cubic meters of gas to the utility Ørsted, covering a third of Danish consumption. However, there will be no supply bottlenecks, according to Copenhagen.
The Dutch company Gasterra stated that from June to October two billion cubic meters of gas would be missing due to the delivery stop. The group had also refused to make the payments in rubles. The reason for this is the contractual agreements and the “risk of violating the sanctions imposed by the EU”. But the company bought elsewhere with foresight. The Netherlands obtains around 15 percent of its natural gas requirements from Russia, around six billion cubic meters per year. Denmark covers 18 percent of its energy requirements with natural gas, three quarters of which the country obtains from its own reserves.
The gas supply stop should therefore not be a problem for Europe. The EU countries have already replaced a third of the gas imports from Russia with supplies from other countries. And yet the member states have not yet been able to agree on a gas embargo, as some are heavily dependent on Russian supplies. First of all, it was agreed that dependence on Russian oil would be reduced by 90 percent by the end of the year. From August, the coal stop from Russia will follow.
Gas embargo could mean recession
In Germany, a gas embargo has so far been avoided because of a possible recession. Economics Minister Robert Habeck, among others, fears this. The raw materials industry, which processes gas directly, would be particularly affected. An embargo could result in serious economic damage and layoffs, including in the chemical industry. This is also confirmed by a study by the Institute for Macroeconomics and Business Cycle Research (IMK). . According to the calculations, the German gross domestic product would fall by six percent in the event of an abrupt gas supply stop.
On the other hand, there are more optimistic results from the German Institute for Economic Research (DIW) in Berlin. The researchers have developed three scenarios showing how Germany can become independent of Russian gas imports in the short term. On the one hand, the demand could be covered by deliveries from other countries. In addition, demand could be reduced by 19 to 26 percent in the short term. If both were used accordingly and technically expanded, the German supply of natural gas would be secured even without Russian imports in the current year and in the coming winter of 2022/23, . At the same time, however, the DIW admits that savings also cause production declines.
However, Germany could deal with the economic effects, says one of the universities of Bonn and Cologne. Accordingly, the gross domestic product would fall by 0.5 to three percent in the short term. Compared to the corona pandemic, however, that would not be much. In 2020, GDP fell by 4.5 percent. The initiative proposes compensating for the missing gas with coal and nuclear energy from other countries. Even so, the deficit would be 30 percent. The authors of the study therefore advocate creating incentives to save on gas.
Source: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
