Gas Flows Via Russian Pipeline Reverse As Gazprom Instructs Clients How To Pay In Rubles

Gas Flows Via Russian Pipeline Reverse As Gazprom Instructs Clients How To Pay In Rubles

As Russian President Vladimir Putin ratchets up the pressure on Germany and its EU compatriots to either agree to pay for Russian gas in rubles, or face a devastating shortfall, gas traveling through the Yamal-Europe pipeline has started traveling in reverse, flowing eastward from Germany to Poland.

According to Reuters, physical exit flows at the Mallnow metering point on the German border stood at 2,691,220 kwh/h, according to data from the Gascade pipeline operator.

That figure was slightly larger than the 1,451,155 kwh/h on Tuesday, before gas stopped flowing eastward.

The pipeline reversal comes as Russian gas giant Gazprom has started sending requests to customers to switch their payment currency to rubles. Notifications about the new payment order had been sent to customers on Friday, the Russian gas giant said in a statement on its official Telegram channel, per BBG.

As Bloomberg points out, various European nations and leaders have differing views on Moscow’s demands. While German Chancellor Olaf Scholz initially resisted the request, denouncing it as a breach of contract, French Ecology Minister Barbara Pompili said she doesn’t consider Moscow’s demands for payment in rubles as a violation, since companies would continue to be able to pay for gas in euros, according to the information received from Moscow. The German government said it is still pouring over the details before coming to a decision, while Denmark condemned the request. A senior energy official in Italy said Friday that if the bloc moved to meet Russia’s demands for payment in rubles, “not much would change”.

“Gazprom as a Russian company is unconditionally and fully compliant with Russian law,” which from April 1 stipulates only ruble payments for gas exported in the “unfriendly” states, the company said. “Gazprom is a responsible partner and continues to export gas to clients in a safe manner.”

Europe relies on Russia for roughly 40% of its gas needs, and despite Washington’s promise to try and wean the bloc off its dependence on Russian products, it’s widely believed that supplanting Russian supplies with exports from the West and Middle East (and elsewhere) would likely take years, if it happens at all (since, as we explained earlier this week, exporters might be reluctant to re-route supplies to Europe because of its long-term orientation toward ‘green’ energy). 

What’s more, the US has already been hiking exports to Europe, raising questions about whether the additional 15 billion cubic meters that President Biden has promised to export to the EU this year is even possible.

To underscore the seriousness of the situation, the CEO of Germany’s multinational BASF SE, the world’s largest chemical producer, has warned that curbing or cutting off energy imports from Russia would likely send the Germany economy into its most “catastrophic” economic crisis going back to the end of World War 2.

Tyler Durden
Fri, 04/01/2022 – 09:23

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