GAIL Ltd, India’s largest gas producer has initiated gas conservation by lessening the supplies to fertiliser and industrial customers after the imports were struck under the deal with Gazprom, a former unit of Russian energy tech.

Consequently, the minimal gas supplies will have a great impact on India’s urea production. The U.K based energy trading company Gazprom Marketing and Trading Singapore (GMTS), failed to deliver some of the liquefied natural gas (LNG) cargos to the GAIL. GMTS has said that it may not be able to deliver the LNG supplies under their long-term deal.

In order to conserve gas for other clients, they said that the state-run business is running its petrochemical facility at Pata in northern India at roughly 60% capacity. One of the individuals noted that GAIL had advanced maintenance closure of some units at the 810,000 tonnes per year plant.

Last month, GAIL purchased a spot LNG cargo for August loading at a price of $38 per million British thermal units (mmBtu), far more than the $12–$14 per mmBtu it was paying for gas as part of its contract with Gazprom.

In 2012, GAIL and Russia’s Gazprom reached a 20-year agreement for the annual purchase of 2.5 million tonnes of LNG on average. The contract’s supply obligations started in 2018.

The contract was signed on behalf of Gazprom by GMTS. Gazprom Germania was a division of the Russian state corporation during the time.

However, as a result of Western sanctions against Russia for its invasion of Ukraine, Gazprom abruptly ceded ownership of Gazprom Germania in the early days of April and subjected some of its operations to Russian restrictions.

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On Saturday, Russian gas producer Gazprom said that it has stopped supplying gas to its neighbour country, Latvia, accusing it of breaching conditions for gas withdrawal.

Russia has already stopped supplying gas to Poland, Bulgaria, Finland, Netherlands, and Denmark, which rejected to pay for gas in line with an order by President Vladimir Putin demanding rouble accounts to be set up in a Russian bank as part of a new settlement scheme.

Russia has also stopped gas sales to Shell Energy Europe in Germany. In a statement on Saturday, Gazprom has not specified which gas withdrawal conditions Latvia had allegedly breached.

Gazprom takes this decision a day after Latvian energy firm Latvijas Gaze said that it was buying gas from Russia and paid in euros rather than the roubles required when trading with Gazprom.

On Friday, a spokesperson for Latvijas Gaze said the gas the company was buying was not from Gazprom. Due to business confidentiality, Latvijas Gaze will not name its provider.

According to Reuters, Latvijas Gaze did not immediately respond to a request for comment on Saturday following Gazprom’s announcement.

Putin in March said that the world’s largest natural gas producer would need countries designated as “unfriendly” in their stance on the conflict in Ukraine to pay for piped gas in roubles.

The European Commission has warned that obeying Putin’s order can violate EU sanctions against Moscow, urging EU companies to continue paying in the currency agreed as per the contracts with Gazprom, the vast majority of which are in euros or dollars.

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The largest company in the Russian Federation by revenue, Gazprom will cut supplies to the Netherlands partly owned state firm GasTerra on Tuesday after it refuses to pay in rubles, the company said.

With the Russian invasion over Ukraine, Moscow has asked clients to pay in rubles for gas, which is probably a way to sidestep Western financial sanctions against its central banks.

The Russian company has said that it will not supply two billion cubic metres of gas to the Netherlands from now till October, GasTerra said.

“GasTerra has repeatedly urged Gazprom to respect the contractually agreed payment structure and delivery obligations, unfortunately to no avail,” it said.

However, the Dutch government said it “understands” GasTerra’s decision not to comply with Gazprom’s “unilateral” demand.

“In response to the decision by GasTerra, Gazprom has announced that it will discontinue supply with effect from May 31, 2022,” GasTerra said on Monday.

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