Gazprom is proposing to expand the ruble-for-gas scheme for liquefied natural gas (LNG), a senior executive said on Monday, days after Russia moved to take full control of the Sakhalin-2 LNG project.
The proposal to request payments in rubles for LNG came from Kiril Polous, who is in charge of Gazprom’s long-term development programs, during a meeting of the parliamentary committee on energy, Russian news agency Interfax reported today.
Last week, a decree by Russian President Vladimir Putin said a newly created state-owned Russian company would take over the rights and obligations of Sakhalin Energy Investment Co., the joint venture that manages the Sakhalin-2 oil and gas project. This could mean a forced exit from the project for Shell and Japan’s Mitsui and Mitsubishi, which are minority shareholders in Sakhalin Energy Investment Co. Shell already said it would exit the project a few months ago and has since been looking for buyers for its stake in Sakhalin-2.
According to some analysts, the exit of Western and Asian partners will eventually lead to tighter LNG supplies due to the lack of experience and parts. At the same time, selling gas will become more difficult because of state control of the project, Credit Suisse’s Saul Kavonik told Reuters.
Russia already operates a ruble-for-gas payment system for the natural gas it sends to Europe via pipeline. Gazprom has already stopped supplying gas to countries and companies that refuse to obey the demand for rubles – Poland, Bulgaria, Finland, as well as customers in the Netherlands, Denmark and Germany.
Many European companies opened ruble accounts at Gazprombank to comply with Putin’s request. However, Gazprom cut pipeline supplies to Germany and Italy in mid-June, citing “technical reasons” and saying Western sanctions were preventing a gas turbine repaired in Canada from returning to Russia on time. Italian Prime Minister Mario Draghi rejected that explanation, calling Russia’s reasons for the reduced flows “lies.”
With supplies from Russia and Nord Stream low for two weeks of support this month, Europe is scrambling to fill gas storage in time for winter.
By Tsvetana Paraskova for Oilprice.com
More top reads from Oilprice.com:
Add Comment