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Russia's Gazprom cuts supplies to Netherlands

May 31, 2022

Russian energy firm Gazprom says it has suspended supplies of gas to the Netherlands after payments were not made in rubles.

Workers stand next to a gas pipeline
The stoppage of gas had been expected after the Netherlands' refusal to pay Gazprom in rublesImage: DW

Russian energy giant Gazprom on Tuesday said it had fully cut off supplies to Dutch trader GasTerra after it failed to make payments for gas delivered in April.

Gazprom said in a statement that the payments should be done in line with the gas-for-rubles scheme, ordered by Russian President Vladimir Putin.

Dutch firm refuses payment demand

"Gazprom has completely stopped gas supplies to GasTerra due to non-payment in rubles," the company said in a statement. 

Gazprom said it had received no payments for Dutch gas supplies in April, despite notifying GasTerra that payments would have to be made in rubles

GasTerra, which is partly owned by the Dutch state, on Monday said it expected to be cut off. The supplier said it "decided not to comply with Gazprom's unilateral payment requirements" because they would breach EU sanctions. 

The halting of gas to the country means that two billion cubic meters of gas will not be supplied to it between now and October. 

Putin uses energy as a weapon

GasTerra said it had "anticipated this by purchasing gas elsewhere."

Danish supplier also expects supply halt

Russia is demanding that clients from "unfriendly countries" — including EU member states — pay for gas in rubles. The measure is intended to sidestep Western financial sanctions against Russia's central bank over the invasion of Ukraine.

GasTerra also said that it was not willing to adopt a compromise system Russia had proposed, which involved paying euros into Russian accounts set up for the purpose which would then be converted into rubles. GasTerra said in a statement that such measures could violate EU sanctions, also saying the scheme "means that anyone wanting to buy gas would have to open both a euro and a ruble account with Gazprombank in Moscow."

The company said it would not comply with this "because to do so would risk breaching sanctions imposed by the EU and also because there are too many financial and operational risks associated with the required payment route." 

However, according to Reuters news agency, German energy giants Uniper and RWE on Tuesday said that they had agreed to pay in this manner, with those companies saying they believed the mechanism conformed with EU sanctions.

The Netherlands is the latest in a series of European countries to be hit with a cut in Russian gas, with Finland seeing its supplies severed earlier in the month. Russia has previously stopped delivering gas to Bulgaria and Poland.  

The Danish energy firm Orsted has also warned its shipments of gas could be cut off when a payment deadline for the end of May passes. 

The Netherlands relies on Russia for some 15% of its gas supplies, well below the EU average of 40%. 

European Union leaders on Monday agreed to ban more than two-thirds of Russian oil imports, in an effort to further ramp up economic pressure on Moscow over its war in Ukraine. Many EU countries rely on Russian oil and gas for their energy needs. 

EU divided over sanctions on Russian oil

rc/nm (Reuters, AFP)