Gas exports from Moscow to countries outside its Commonwealth of Independent States, which includes 11 countries in Central Asia and Eastern Europe, fell by nearly 28% in the first five months of 2022, Russia’s state energy giant Gazprom (GZPFY) said. Wednesday. So far, Gazprom has cut off at least 20 billion cubic meters of its annual gas supplies to customers in six European countries – Poland, Bulgaria, Finland, Denmark, Germany and the Netherlands – because it failed to make payments in rubles, President Vladimir said. Putin did it back in March.
This amounts to nearly 13% of the total annual gas imports to the European Union from Russia, according to the International Energy Agency.
But James Huxtep, head of gas analysis for EMEA at S&P Global Commodity Insights, told CNN Business that gas prices had risen to an average of 96 euros per megawatt-hour ($ 102) in 2022 compared to last year.
As a result, “it is unlikely [Russia] we will have significantly less revenue until further cuts are made, “Huxtep said.
Following Putin’s ultimatum, Gazprom is offering customers a workaround. Buyers could make payments in euros or dollars to an account at Russia’s Gazprombank, which will then convert the funds into rubles and transfer them to a second account from which payments will be made to Russia. Many large customers took advantage of Gazprom’s offer to maintain gas supplies. But others resisted. On Tuesday, Shell (SHLX) Energy said it “did not agree to new payment terms”, which stopped Gazprom’s flows to its German customers. The Dutch GasTerra similarly said in a statement Monday that it would not comply with “Gazprom’s unilateral payment requirements”. In any case, the EU is moving rapidly to reduce its dependence on Moscow, increasing imports of liquefied natural gas (LNG) and promising to reduce its consumption of Russian gas by 66% before the end of the year.
States are also vying to replenish their gas storage facilities before winter to avoid potentially catastrophic supply disruptions. The bloc has set targets for Member States’ underground stores to be at least 80% full by November.
Germany, the bloc’s largest economy, relies heavily on Russian gas to power homes and heavy industry, but has managed to reduce Moscow’s share of its imports to 35% from 55% before the war in Ukraine.
Russia may not yet feel the impact. Although the EU is its largest gas buyer, according to the US Energy Information Administration, rising oil and natural gas prices have boosted Moscow’s revenues.
The country’s fossil fuel imports from the EU generated $ 47 billion in the two months following Russia’s invasion of Ukraine, more than double the same period in 2021, according to a report by the Center for Energy and Clean Air Research. And some of Europe’s largest energy companies have begun the process of opening new Gazprombank accounts to keep gas flowing, despite EU officials insisting such a move would violate sanctions against Russia. But as Europe moves further and further away from Russian gas in the coming months, it will be harder for Moscow to find alternative buyers – as it has done for its oil – as gas exports come mainly through pipelines, which may take time to build. years.
“Robert North contributed to the report.”
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