German gas buyers raise the alarm over Russia’s ruble demand

(EurActiv, 24 Mar 2022) German utilities on Thursday (24 March) said their country needed an early warning system to tackle gas shortages, a day after Russia ordered the switch of contract payments to rubles, raising the risk of a supply squeeze and even higher prices.

President Vladimir Putin’s ruble payment demand, which IEA Executive Director Fatih Birol called a “security threat”, added to market nervousness and calls into question Russia’s historic claim it is a reliable gas supplier regardless of geopolitics.

Europe’s energy sector is already witnessing supply concerns and the benchmark price for German delivery next year is up 8% since Putin’s remarks, after already quadrupling over the last 12 months.

For more than 50 years, even during the Cold War, Moscow has ensured supply to Germany, the biggest consumer of Russian gas. Russia’s main gas exporter Gazprom has more than 40 long-term agreements with European counterparties.

But on Thursday, Germany’s utilities association BDEW, which counts Gazprom customers RWE and EnBW’s VNG (VNG.UL) as members, urged the government to devise an early warning system in case Russia stops supplies.

“There are concrete and serious indications that the gas supply situation is about to deteriorate,” BDEW president Kerstin Andreae said, citing Russian’s demand for “unfriendly” countries, which include Germany, to pay for gas in rubles.

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EurActiv, 24 Mar 2022: German gas buyers raise the alarm over Russia’s ruble demand