Gazprom calls complete stop on gas deliveries to France’s Engie

Gazprom is set to halt all gas deliveries to French utility Engie from Thursday, citing a payment dispute, adding to concerns over Russian supplies to Europe over the coming weeks as France and its neighbours search for alternatives.

The Russian state-owned gas group said late on Tuesday that it would suspend Engie’s deliveries in full from September 1 until the row had been resolved, saying it had not “received full payment for the gas supplied to Engie in July under existing contracts”.

Engie, which is France’s biggest supplier of gas to households and companies, had earlier warned its Russian deliveries would be reduced, citing a disagreement “on the application of some contracts”.

The complete cut comes after falls in the flow of Russian gas to Europe in recent weeks, which had prompted warnings from politicians in Europe that deliveries might stop altogether.

“Russia is using gas like a war weapon,” French energy minister Agnès Pannier-Runacher told France Inter radio earlier on Tuesday.

France has long been less dependent on Russian gas than neighbours such as Germany but has still been rushing to find alternatives, increasing imports from other suppliers.

Engie, which said it already had taken measures to ensure gas supplies to its customers, is in discussions with Algeria’s Sonatrach to boost gas deliveries through midterm contracts, following French president Emmanuel Macron’s visit to the country last week.

Engie’s deliveries of Russian gas, which normally account for about 17 per cent of its yearly supply, had already dropped to about 4 per cent, or a monthly level of 1.5 terawatt hours, following the Russian invasion of Ukraine in February and western sanctions against Russia.

Europe’s energy crisis has worsened in recent weeks as the price of gas has continued to soar to new heights, rising higher than $500 a barrel of oil equivalent last week.

Electricity prices have also soared, driven primarily by the price of gas and tightness in the market caused by the large number of French nuclear plants that are offline.

That has turned France, normally heavily reliant on its nuclear generation, into an importer of electricity, requiring neighbouring countries to increase gas and coal burning to meet its demand.

The EU said on Monday it was preparing emergency measures to curb the price of electricity by separating it from the soaring cost of gas. Utilities and exchanges have warned that record prices require additional government support as the need to post additional collateral has spiralled.

Macron is set to hold a national defence council on Friday to address gas supplies and power planning for the winter, news agency AFP has reported.

French gas storage levels for the coming winter had reached 90 per cent of their capacity, and France was exporting gas to Spain and Germany, Pannier-Runacher said.

Additional reporting by Max Seddon in Riga