Starting September 1, Gazprom paused all gas deliveries to the French energy group Engie due to outstanding payments for July supplies.
Gazprom Export informed Engie that gas flow would remain halted until the full payment for gas delivered since September 1, 2022 has been received, according to Gazprom Export.
The Russian supplier recalled the new payment framework and noted that, per the decree issued by the President of Russia, gas supply is barred to any foreign buyer who does not settle accounts within the contract window.
In response, a spokesperson for the French Ministry of Ecological Transition said France had prepared for such a development by diversifying its supply sources and building up reserves as much as possible.
Disputes between Gazprom and Engie
Earlier, Engie, which is 24% state-owned, received a formal notice from Gazprom about a further cut in gas supplies. The exact scale of the reduction was not disclosed by Gazprom.
The French side attributed the decrease to ongoing disagreements over contract implementation. It stressed that the interruption would not jeopardize gas deliveries to customers and that Engie had secured the necessary volumes to meet its obligations and technical needs. It also highlighted that measures were in place to minimize any direct financial or physical damage from the disruption of Gazprom’s gas transportation, citing the company’s plan of action.
Nikita Blokhin, a senior analyst at Alfa-Bank, commented to Vedomosti that Gazprom’s friction with Engie could involve long-term supply agreements.
According to statements from the European Commission, payments for Russian gas should be treated as fulfilling contractual obligations. Gazprom, under Russian law, considers the crediting of funds in rubles after conversion as a valid payment for deliveries. Analysts noted that both parties must comply with national laws where they operate, which can fuel disagreements over contract clauses.
What will happen to gas supplies to France?
Engie indicated that Gazprom’s deliveries had already fallen notably since the start of the conflict in Ukraine.
Engie reported receiving approximately 1.5 terawatt hours per month recently (around 145.7 million cubic meters monthly). By contrast, Engie’s total annual European gas deliveries exceed 400 terawatt hours. Russia’s gas accounted for about 17% of France’s needs, with the International Energy Agency estimating roughly 14 billion cubic meters delivered to France per year. In June, Engie joined two other French energy firms in urging residents and businesses to curb gas consumption in light of potential cuts in Russian imports. French Prime Minister Elisabeth Borne warned that consumers could face gas reductions with serious economic and social consequences if action was not taken.
Gas storage facilities are over 90% full
Reuters reported that Gazprom’s decision to curb supplies to France does not appear to destabilize the country’s energy market. Engie’s vice president, Claire Waysand, noted France’s gas storage levels exceed 90%, which should help the country weather a milder winter. She also warned that conditions could worsen if cold weather persists. Engie has begun talks with Algeria’s Sonatrach as part of diversifying away from Russian supplies. In April, French President Emmanuel Macron indicated that France would pursue gas from alternative sources as needed. The broader European situation reflects an era of reduced reliance on single suppliers and careful management of reserves. Since the start of the year, Gazprom has reduced its gas exports to non-CIS markets by about 36%, totalizing 78.5 billion cubic meters. The company did not rule out a scenario where European gas prices could rise above prior winter records if supply constraints persist. Bloomberg reported that EU storage stood at 79.4% of capacity as of August 27, still below the 80% target for November, suggesting the region may face continued challenges in meeting energy needs without Russian gas.