Dutch and Danish set to be cut off by Russia over gas payment dispute

Denmark and the Netherlands have become the last countries to refuse Russia’s demands on how to pay for its gas, further highlighting disputes in the EU over reliance on Russian energy supplies.

GasTerra, a partly Dutch state gas trader, said Gazprom, Russia’s largest gas exporter, would cut supplies on Tuesday after deciding not to meet Moscow’s “unilateral” payment requirements, which include a demand for payments in rubles. .

Ørsted, Denmark’s largest gas supplier, also warned on Monday that there was a “risk” that Gazprom would stop supplying gas because of its decision to continue paying in euros before the deadline for its payment.

Denmark and the Netherlands will join Finland, Poland and Bulgaria to shut down their gas supplies by Russia. The countries account for 16 percent of the volumes Russia experienced supplying to Europe earlier this year and are now needed to source them from elsewhere.

The termination of GasTerra’s contract means that 2 billion cubic meters of gas will not be supplied between now and October.

The company, which owns half of the Dutch state and the rest owned by Shell and ExxonMobil, said it was impossible to predict “whether the European market can absorb this loss of supply without serious consequences”.

Rob Jatten, the Dutch energy minister, said households and industry would not be affected because GasTerra bought more gas in anticipation of the move. “However, the government will continue to monitor the situation closely in the near future,” he said.

In late March, President Vladimir Putin signed an order requiring buyers from “unfriendly countries” to set up accounts in euros and rubles with Gazprombank in Russia. The opposing side of the deal was later modified to limit the involvement of the Russian central bank, which is under EU sanctions.

The major EU gas buyers in Germany and Italy – whose payment dates are approaching – have suggested that they see the payment method as compatible with EU sanctions and contract terms for long-term supply agreements, which usually specify the currency and method of payment. .

The EU has gradually sharpened its guidelines, warning that using a ruble bank account could violate sanctions and warn companies against exchange rate risk. Despite the warnings, Italian Eni has opened a ruble bank account in the sign that it is prepared if necessary to comply with Moscow’s payment mechanism to maintain gas flow.

GasTerra said compliance with Russia’s payment mechanism would risk violating EU sanctions and would pose “too many financial and operational risks”, mainly due to the opening of accounts in Russia that would be under Moscow’s control.

“Gazprom’s European market share will take another hit with GasTerra and Ørsted’s refusal to change the way they pay,” said Tom Marzak-Manser of ICIS, a consulting firm. “Although the market has largely expected a disconnection of the two companies, this development will make the supply and demand balance much tighter.”

The split in access to Putin’s payment demands comes as the EU tries to agree on a softened embargo on Russian oil, including a temporary exemption on supplies coming through the Druze pipeline to reassure Hungary.

Another report by Andy Bounds in Brussels

Dutch and Danish set to be cut off by Russia over gas payment dispute Source link Dutch and Danish set to be cut off by Russia over gas payment dispute

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