Russia to stop gas supplies to Europe (1/4/22)

[cupid_stunt]

* Unless Putin is having a laugh.

So, today's the deadline for Europe and other "unfriendly" countries to start paying for Russian gas in roubles, or the gas supply will be cut, certainly some countries are refusing to do so, insisting they will continue to pay in euros, as per their contracts.

The big question is will he actually do it?

My gut feeling is yes, because he's going to look bloody stupid if he doesn't, but some countries and companies may decide to switch payments to roubles, so here's a thread to discuss the fall out of the situation as it unfolds.

Vladimir Putin has said buyers of Russian gas from "unfriendly" countries will have to pay in roubles from accounts in Russia from Friday, or face the "consequences".

"They must open accounts in roubles in Russian banks. And from these accounts they will have to pay for the gas delivered and that as of tomorrow," the Russian leader declared on television after signing a decree. In the event of refusal, “the current contracts will be stopped,” he added.

"If these payments are not made, it will be considered as a breach of obligations on the part of the buyer, and this will have all the necessary consequences."

Moscow published a list of "unfriendly" countries in early March, which includes the United States, members of the European Union, the United Kingdom, Canada, Japan, Switzerland, Taiwan, South Korea, Norway and Australia.

Western companies and governments have rejected the move as a breach of existing contracts, which are set in euros or dollars.

European countries will continue to pay for Russian gas in euros and dollars as it is "written in the contracts", was German Chancellor Olaf Scholz's response to Putin on Thursday.

"I made it clear to the Russian president that it would stay that way" and "companies want to be able to pay in euros and will do so," he said during a news conference with his Austrian counterpart, Karl Nehammer.

German Economy Minister Robert Habeck said Russia had not been able to divide Europe and said Western allies were determined to not be "blackmailed" by Russia.

France echoed the German stance. "The contracts provide for a currency in which they are executed and therefore the contracts must be executed in the currency provided," French Finance Minister Bruno Le Maire said on a visit to the German capital.

Several German and other European companies with Russian contracts had no immediate comment.

Neither Poland's PGNiG nor the government commented immediately. There was no word either from Italian energy firm Eni, another major European buyer of Russian gas.

Will Putin cut Europe off if gas payments aren't made in roubles?

Moscow says its demand for "unfriendly" buyers to pay for gas in roubles does not mean supplies will be immediately interrupted.

www.euronews.com

 

[maomao]

If the west wants to win the 'economic war' they should just turn the pipe off and get on with rationing/insulating/ alternative energy sources etc.

 

[MrCurry]

The Germans, with their anti-nuclear, fossil fuel dependant energy policy and optimistic gas pipeline project which put them under the thumb of Putin, are looking pretty silly right now.

We are all fucked if this unfolds as it’s looking, because even if your heating isn’t in gas, it’s going to affect prices of all types of fuels. I’m coming off a five year fixed electricity price tariff in the summer, and while it’s been great paying prices from 5 years ago up until now, I’m sure I’m going to find all of this Russia BS is going to still be an issue when I need to shop for a new deal.

 

[Cid]

War? Oh no, we must keep the gas flowing, it would ruin us...

Breach of contract? Well not a fucking chance we're standing for that, that's just not proper economics.

 

[cupid_stunt]

Good piece from the Telegraph, including this graphic showing which European countries depend the most on Russian gas.

It begs the question of how the hell some countries could possibly cope without the gas, I did hear a report that Germany plans to cut supplies to industry, to prioritise supplies to domestic users.



They ask the six million dollar question - It’s now a question of who blinks first as the deadline looms.

Russian supplies to Europe could be cut off - either through buyers stopping purchases or Russia stopping sales. Kremlin spokesman Dmitry Peskov told reporters on Monday “we clearly aren’t going to supply gas for free.” He added: “In our situation, it’s hardly possible and feasible to engage in charity for Europe.”

Whether Russia would go as far as cutting off supplies is unclear, however, with the country keen to maintain its reputation as a responsible supplier of gas.

Experts say what really matters to Russia is the ongoing sales of energy, rather than the currency used to buy it. “Energy exports give Russia purchasing power, which it can convert into goods from abroad,” Robin Brooks, chief economist at the Institute of International Finance, told AFP.

Importers are taking the threat seriously. Germany, which is among the most reliant on Russian gas, triggered the first step in its national gas emergency plan on Wednesday morning, indicating there is a “serious risk” of disruption. According to S&P Global Platts, this requires a crisis team to assess the supply situation, with the second level only activated if there are supply disruptions.

The European Commision has been assessing scenarios that included a full halt to Russian gas supplies next winter. An immediate cut off of Russian exports would have severe consequences, however, with gas rationing and industrial users first hit.

Paywall busted link - archive.ph

 

[maomao]

even if your heating isn’t in gas, it’s going to affect prices of all types of fuels.

Put an extra jumper on.

 

[rubbershoes]

I thought Germany was big on wind power. Obviously not as much as I thought

 

[two sheds]

Wonder what will happen to the price of Norwegan gas that we're getting, also for electricity supplies.

Share of electricity production from gas

An interactive visualization from Our World in Data.

ourworldindata.org

 

[cupid_stunt]

If the west wants to win the 'economic war' they should just turn the pipe off and get on with rationing/insulating/ alternative energy sources etc.

May have no choice with rationing, but the rest is hardly an overnight solution, it would take many months/years.

 

[cupid_stunt]

A gloomy forecast for German industry, and of course it would be similar in other countries too, with hundreds of thousands of jobs at risk.

Under the country's emergency plan, industry will be first in line for supply cuts. The move could devastate the economy and lead to job losses, business leaders and unions told German media outlet DW.

A union leader from BASF — the world's largest chemical maker — told DW all 40,000 employees in the key production site in the Western city Ludwigshafen would have to be put on shorter working hours or be laid off.

"The consequences would not only be reduced work hours and job losses, but also the rapid collapse of the industrial production chains in Europe — with worldwide consequences," said Michael Vassiliadis, the president of Germany's IG BCE chemical workers union and a BASF supervisory board member, per DW.

Germany is preparing to ration its natural-gas supply if a standoff with Russia over ruble payments escalates further

Russia accounted for 55% of Germany's natural-gas imports in 2021 and 40% in the first quarter of 2022.

www.businessinsider.com

 

[Pickman's model]

I wonder what forum is supposed to arbitrate or hear disputes about this contract

 

[Cid]

A gloomy forecast for German industry, and of course it would be similar in other countries too, with hundreds of thousands of jobs at risk.

Germany is preparing to ration its natural-gas supply if a standoff with Russia over ruble payments escalates further

Russia accounted for 55% of Germany's natural-gas imports in 2021 and 40% in the first quarter of 2022.

www.businessinsider.com

Isn't there some skepticism among German academics about how true this actually is? I had a brief scan back when this first (first in relation to sanctions anyway) came up, but forget details.

Also worth remembering that they felt quite able to just double their defence budget.

This article is quite interesting in terms of who's saying what, and where the objections are coming from. Personally have no capacity to judge actual outcomes, but dire warnings from utility and industry sectors certainly shouldn't just be uncritically accepted.

Can Germany survive without Russian gas? – DW – 03/29/2022

Experts are divided on how quickly Germany could cut imports of Russian energy and stop funding President Vladimir Putin's invasion of Ukraine. How vulnerable would such a move leave Europe's largest economy?

www.dw.com

 

[High Voltage]

Norway is obliged to switch supply from, say, the UK, to say, members of some energy "group" (can't remember what is called) should they be asked by said members of said group

So whilst the UK doesn't initially have much gas supplied directly from Russia, indirectly we will still feel the impact

 

[gosub]

Putin May Collect $321 Billion Windfall If Oil and Gas Keep Flowing

Russia’s economy has staggered through the first full month of the war with Ukraine but it may yet emerge with a sparkling balance sheet if some of its biggest trade partners don’t turn off the tap on its exports of energy.

www.bloomberg.com

 

[gosub]

Sort of reminds me of the US war of Indendepence in that British perceived it as a fight with the French (which UK won ) in that paying for the thing causeed the French revolution.

No way now this isn't going to be painful for the West but Ukraine might as well endure.

With middle east grain supplies lookihng fuck will be interestin whether UK or EU that has the flexibility to revert to 80's priorities CAP.

 

[Flavour]

Imagine an alternative present where we'd spent the last 30 years actually investing in renewable energy in something resembling a serious manner

 

[andysays]

Not a direct equivalent, but this is worth reading for an idea of some measures that might be considered

Three-Day Week​

The Three-Day Week was one of several measures introduced in the United Kingdom in 1973-1974 by the Conservative government at the time to conserve electricity, the generation of which was severely restricted owing to industrial action by coal miners and railway workers.

 

[Dogsauce]

Imagine an alternative present where we'd spent the last 30 years actually investing in renewable energy in something resembling a serious manner

Or some kind of green deal to insulate houses and mandatory zero carbon new homes. I seem to remember some grown-up politicians having such a plan, what happened to it?

 

[Dogsauce]

I did think that it would be good to have a ‘Shiver for Ukraine’ day of action where people are encouraged not to put the heating on for 24hrs, just put on a jumper and bear it, also as part of solidarity/empathy for all those civilians stuck in the cold in Ukraine with no power (and I guess people in fuel poverty everywhere). Any reduction in demand ultimately comes out of the pocket of the demented Putin.

 

[existentialist]

I did think that it would be good to have a ‘Shiver for Ukraine’ day of action where people are encouraged not to put the heating on for 24hrs, just put on a jumper and bear it, also as part of solidarity/empathy for all those civilians stuck in the cold in Ukraine with no power (and I guess people in fuel poverty everywhere). Any reduction in demand ultimately comes out of the pocket of the demented Putin.

I'm up for this, and have done my two days already

 

[Cid]

I will go back to my resolute non-use of heating in er... <hmm> about 4 days.

 

[cupid_stunt]

I was wondering why we hadn't heard more on this, well it's because the 1st April deadline was for gas supplied from then to be paid in roubles, but anything supplied from that date isn't due for payment until the end of April and into May, so there's a few weeks before the potential switch off.

 

[cupid_stunt]

This had a mentioned on the main war thread -

Baltic states halt Russian gas imports​

The head of Latvia’s natural gas storage operator said on Latvian radio today that the Baltic states were no longer importing Russian natural gas.
AFP is reporting that Uldis Bariss, CEO of Conexus Baltic Grid, said: “Since 1 April, Russian natural gas is no longer flowing to Latvia, Estonia and Lithuania.”
This interview came after Lithuanian president Gitanas Nauseda called on the rest of the Europe to follow the example of the Baltic states. LINK

But, they are small countries, and have had plans in place for some years.

 

[cupid_stunt]

Apparently the Baltic states are currently being served by gas reserves stored underground in Latvia (LINK), as they look to import more from elsewhere, via the LNG terminal built in 2014.

Lithuania will now receive all natural gas through the liquefied natural gas (LNG) terminal in the port of Klaipeda and it will not be Russian.

Klaipeda The LNG terminal, called Independence, was opened in 2014 to end Russia's monopoly on gas supplies, which then-President of Lithuania Dalia Grybauskaite called an “existential threat” to the country.

Russian saboteurs were not able to create what was conceived in the Sumy region - The Times Hub

Spread the love Russian sabotage-rozvіduvalnaya group again tried to cross the cordon in Sumy region Dmytro Zhyvitsky, the chief of the Sumy OVA. Behind these words, 20 September was close […]

thetimeshub.in

 

[yield]

I was wondering why we hadn't heard more on this, well it's because the 1st April deadline was for gas supplied from then to be paid in roubles, but anything supplied from that date isn't due for payment until the end of April and into May, so there's a few weeks before the potential switch off.

Germany says Putin agreed to keep payments for gas in euros
30.03.2022

The Russian leader said money would be paid into Gazprom Bank, which is not a subject of sanctions, and then transferred in rubles to Russia, according to a German statement.

 

[cupid_stunt]

Germany says Putin agreed to keep payments for gas in euros
30.03.2022

There seems some confusion in that article, and that headline could be misleading.

In a phone call with Scholz, Putin said the money would be paid into Gazprom Bank and then transferred in rubles to Russia, a German statement said. The bank is not currently subject to sanctions.

"Scholz did not agree to this procedure in the conversation, but asked for written information to better understand the procedure," the statement added.

Hence more talks.

The Kremlin said the two leaders agreed that experts from each country would hold further discussions on the matter.

 

[Indeliblelink]

This makes it sound like it won't cause too much trouble, apart from the UK due to our ban on companies using Gazprombank and even there they seem to be trying to work something out.

Shell Will Have Difficulty Paying for Russian Gas Due to U.K. Sanctions

Shell Plc may have difficulty paying for Russian gas supplies this month because the Kremlin wants payments transfered through U.K.-sanctioned Gazprombank JSC, according to two people familiar with discussions in Russia.

www.bloomberg.com

To keep receiving Russian natural gas, all European buyers now need two accounts in Gazprombank, one in rubles and one in a foreign currency, with the Russian bank responsible for making the conversion. This is not possible for Shell because the Gazprom-owned lender was sanctioned by the U.K. in March in retaliation for the invasion of Ukraine.

Gazprom is aware of potential payment issues with Shell and is looking into ways to resolve them, the people said on condition of anonymity because the discussions are not public. The Russian energy firm does not expect the switch to rubles to become a significant problem in its dealings with most of European clients, one of the people said.

A number of EU officials have indicated that the new payment rules will probably have little effect on Russian supplies to the continent as the customers can still transfer the money in dollars or euros, depending on their contracts. Still, the question of whether the Russian decree undermines sanctions must be agreed at the EU level, according to a German official.

 

[cupid_stunt]

This makes it sound like it won't cause too much trouble, apart from the UK due to our ban on companies using Gazprombank and even there they seem to be trying to work something out.

Shell Will Have Difficulty Paying for Russian Gas Due to U.K. Sanctions

Shell Plc may have difficulty paying for Russian gas supplies this month because the Kremlin wants payments transfered through U.K.-sanctioned Gazprombank JSC, according to two people familiar with discussions in Russia.

www.bloomberg.com

It's as clear as mud TBH, Russia have offered a loophole, but European leaders have not agreed to it yet.

The Kremlin offered what could be seen as a loophole. Importers would simply have to establish an account in dollars or euros at a designated bank, then a second account in rubles. The importer would pay the gas bill in euros or dollars and direct the bank to exchange the money for rubles.

In any case, Kremlin spokesman Dmitry Peskov said Friday that the change won’t happen immediately: “Payments on shipments in progress right now must be made not this very day, but somewhere in late April, or even early May.”

European leaders have rejected the proposal as “blackmail” and say payments will continue in dollars and euros.

German officials wouldn’t discuss the impact of Putin’s decree other than to say they were examining it. Economy Ministry spokeswoman Beate Baron noted that Russia’s Gazprombank has been given 10 days to explain the procedure, “and of course we will in turn look carefully at that.”

A top European Commission energy official tweeted that the European Union was coordinating “to establish a common approach.”

EXPLAINER: What's next for Europe's natural gas during war?

Russian President Vladimir Putin is demanding payment in rubles for natural gas — or else. Germany is talking about gas rationing in case of a cutoff.

apnews.com

 

[The39thStep]

Slovakia and Hungary, ruled by ultraconservatives, have already announced that they are willing to pay for Russian gas in rubles

 

[Pickman's model]

Slovakia and Hungary, ruled by ultraconservatives, have already announced that they are willing to pay for Russian gas in rubles

splitters