The media learned about Shell’s problems with paying for Russian gas in rubles due to sanctions

The British-Dutch oil and gas company Shell may face problems in paying for Russian gas this month, as demanded by the Russian authorities, in rubles, according to Bloomberg, citing two informed sources. The difficulty is that settlements must be made through Gazprombank, and Shell is banned from cooperating with it due to British sanctions against the bank.

In order to continue receiving gas from Russia, all European companies from “unfriendly” Moscow countries must set up two special K-type accounts – ruble and foreign currency – in an authorized Russian bank and make all payments for gas through it in rubles. The corresponding decree was signed the day before, on March 31, by Vladimir Putin. Gazprombank has been appointed the authorized bank. But because the bank came under British sanctions in March over a “special operation” * in Ukraine, British law prohibits Shell from interacting with it.

Gazprom is aware of Shell’s potential problems and is trying to solve them, Bloomberg sources said on condition of anonymity because the discussions are not public. According to Bloomberg, Gazprom provides about 40% of the gas consumed by European countries. Shell has at least two long-term contracts with the Russian company, which are subject to the new rules – the supply of them is equivalent to about 1.5% of Gazprom’s annual exports to key foreign customers, the agency said.

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According to one source, in general, the Russian company does not think that the transfer of supplies in rubles will be a problem for cooperation with most European customers.

The Shell press service said it was “closely monitoring the situation.” The company refused further explanations.

Shell has previously promised to “phase out” purchases of Russian oil, gas and LNG, but will continue to receive some supplies under long-term contracts until they expire. Shell has an agreement with Gazprom until 2031 to supply gas to Germany, as well as until 2028 for supplies to the UK.

Gazprom began notifying customers of the new payment procedure on April 1. Consumers will have a few weeks to adjust to the new rules, as payments for gas received in April should be made only at the end of this month or in May, Putin’s spokesman Dmitry Peskov was quoted as saying.

Putin demanded that gas supplies be converted into rubles for “unfriendly countries” on March 23, almost a month after the start of a “special operation” * in Ukraine. The decree came into force on April 1. Putin also demanded that the Central Bank and Gazprom report on supplies in rubles. On April 1, Gazprom began sending notifications to importers about new rules for paying for Russian gas. Buyers will have a few weeks to adjust to the new rules, as payments for gas received in April should be made only in late April or May, the agency quoted Putin’s spokesman Dmitry Peskov as saying.

The list of unfriendly countries includes the entire EU, as well as the United Kingdom, the United States, some European countries, Japan, Canada, Micronesia, New Zealand, South Korea, Singapore, Taiwan and Ukraine.

Italian Prime Minister Mario Draghi called Moscow’s conditions “essentially a breach of contract”, German Chancellor Olaf Scholz said the currency of payment was set in the contracts, and European Commission President Ursula von der Leyen suggested that Russia was trying to circumvent sanctions. On March 28, Peskov said that Russia did not intend to “engage in European charity” and export gas to “unfriendly” countries for free if it was not paid for in rubles.

* According to the request of Roskomnadzor, when preparing materials on a special operation in eastern Ukraine, all Russian media are obliged to use information only from official sources of the Russian Federation. We cannot publish materials in which the operation is called “attack”, “invasion” or “declaration of war”, if it is not a direct quote (Article 53 of the Federal Law on the Media). In case of violation of the requirement from the media, a fine of 5 million rubles may be imposed, and the publication may be blocked.

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