Energy giant Shell has confirmed it will not set up a rouble account, under new terms demanded by Kremlin-backed giant Gazprom.
This means it will no longer be contracting Russian gas to fulfil its contracts to European households, including its customers in Germany.
A Shell spokesperson told City A.M.: “Shell has not agreed to new payment terms set out by Gazprom, including the creation of K accounts. We will work to continue supplying our customers in Europe through our diverse portfolio of gas supply. Shell continues to work on a phased withdrawal from Russian hydrocarbons, in compliance with applicable laws and regulations.”
Shell’s stance is consistent with its announcement to exit the Russian market following Russia’s invasion of Ukraine.
Alongside rivals, it has ditched assets in the country – including a 27.5 per cent stake in a major liquefied natural gas facility (LNG) and its lucrative Russian petrol trading business.
Shell forecasts its divestment from Russia will cost the oil and gas giant up to $5bn (£3.8bn).
Earlier this year, Russian President Vladimir Putin signed into law requirements for “unfriendly” overseas buyers to pay for Russian gas in roubles.
This despite the vast majority of European companies signing euros or dollars agreements with Gazprom for gas supplies.
The move is widely considered retaliation to Western sanctions following Russia’s invasion of Ukraine.
Other European companies such as Uniper have complied with the rouble demands, which adopt a murky conversion payment system to avoid European Union (EU) sanctions.
However other firms such as Dutch trader GasTerra and Danish giant Orsted have held firm alongside Shell, and refused to pay in roubles.
Gazprom has cut off gas deals with companies in Netherlands, Poland, Bulgaria and Finland over the past month, as a consequence of resistance from firms.