Russia to halt gas supply to Netherlands as Dutch company refuses to pay in rubles

Russian energy firm Gazprom will cut off gas supplies to the Netherlands' partly state-owned energy firm GasTerra on May 31 after the Dutch company refused to pay in rubles. Notably, following Russia's invasion of Ukraine on February 24, Moscow has asked clients from "unfriendly countries," including EU member states, to pay for gas in rubles, allowing it to avoid Western financial sanctions against its central bank.

GasTerra, a Dutch energy company, announced on May 30 that it had refused to pay for Russian gas in rubles, after which Gazprom informed it that deliveries would cease on May 31, resulting in approximately 2 billion cubic metres of gas not received under the current contract.

GasTerra stated, "In response to this decision by GasTerra, Gazprom has announced that it will discontinue supply with effect from May 31, 2022."

According to GasTerra, the Russian energy behemoth's decision implies that two billion cubic metres of gas will not be provided to the Netherlands between May and October, despite the fact that it "has anticipated this by purchasing gas elsewhere." Further, GasTerra stated it had repeatedly asked Gazprom to adhere to the contractually agreed payment structure and delivery responsibilities, but that it had been unsuccessful.

Denmark's Russian Gas supply at 'risk' over ruble payment dispute

The company went on to say that it didn't know whether the European market could handle the loss of these volumes without serious consequences. Furthermore, Orsted, Denmark's largest gas supplier, warned on May 30 that there was "a risk" that Gazprom would stop supplying gas due to its decision to continue paying in euros before the end of the month payment deadline. Notably, Netherlands and Denmark would join Poland, Bulgaria and Finland in having their gas supplies cut off by Moscow.

The countries account for 16% of the volumes that Russia was contracted to deliver to Europe at the beginning of the year, but must now be sourced elsewhere. Russian President Vladimir Putin signed a decree at the end of March requiring buyers from "unfriendly countries" to open accounts in euros and roubles with Gazprombank in Russia. The transaction's counterparty was later changed to limit the involvement of the Russian Central Bank, which is sanctioned by the EU.

Image: AP