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Russia is in the process of shutting off some of Germany’s gas

Gazprom (GZPFY)The Russian state energy giant said on Tuesday that it would halt exports of natural gas Shell (SHLX) from Wednesday because the company had not made payments in rubles.

“Shell Energy Europe Limited has notified Gazprom Export LLC that it does not intend to make payments under the gas supply contract to Germany in rubles,” Gazprom said in a statement on its Telegram account.

Gazprom said Shell would lose up to 1.2 billion cubic meters in annual gas supply – just a small fraction of the 95 billion cubic meters the country consumes each year, according to Germany̵[ads1]7;s economic ministry.

But Gazprom’s move is likely to continue to rattle German industry, which is heavily dependent on Moscow’s gas. The country has already managed to cut Russia’s share of gas imports to 35% from 55% before the war began.

A spokesman for the German government told CNN Business that they “monitor the situation very closely.”

“Security of supply is guaranteed,” the spokesman added.

Gazprom’s announcement comes just a day after they said they would stop the gas supply to the Danish energy company ├śrsted and the Dutch gas trading company GasTerra, and weeks after it closed its cranes to Poland, Bulgaria and Finland.

In March, Russian President Vladimir Putin threatened to cut gas supplies to “unfriendly” countries that refused to pay in rubles, instead of euros or dollars in contracts.

Since then, Gazprom has offered customers a solution. Buyers could make euro or dollar payments to an account in Russia’s Gazprombank, which would then convert the funds into rubles and transfer them to another account from which the payment to Russia would be made.

But many European companies, including Shell Energy, have refused to follow suit.

“Shell has not accepted new payment terms set by Gazprom,” a Shell spokesman told CNN Business on Tuesday. “We will work to continue to supply our customers in Europe through our diverse portfolio of gas supply.”

Dutch GasTerra similarly said in a statement on Monday that they would not comply with Gazprom’s “unilateral payment demands”.

Henning Gloystein, director of energy, climate and resources at Eurasia Group, told CNN Business that the recent closure does not represent a “major loss of revenue” for Gazprom, as exports to Shell Germany accounted for less than 1% of Russia’s total exports to the EU last year. .

“On the other hand, European energy companies that rely much more on Russia’s supply … have largely switched to Gazprom’s new payment mechanism to secure their operations,” he added.

Inke Kappele, Anna Stewart and Robert North contributed with reporting.

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