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Russia will cut off gas supplies to the Netherlands; could follow denmark

Russia will cut off natural gas supplied through gas pipelines to the Netherlands and Denmark could be next.

GasTerra BV noted that shipments will stop tuesday after he rejected new payment terms imposed by Gazprom PJSC and Russian President Vladimir Putin. Denmark’s Orsted A/S said it was preparing for a cut as the company, best known for its wind power business, also refused to budge.

Russia imposed new payment conditions on European companies, such as opening a ruble account with Gazprombank. Traders have been closely watching the payment disputes, and as a result Gazprom has already stopped supplies to Poland, Bulgaria and Finland.

GasTerra will not accept Gazprom’s demands for payment”, the company said in a statement on its website. “This is because doing so would risk breaching the sanctions imposed by the EU and also because there are too many financial and operational risks associated with the required payment route.”

European nations are divided on how to handle Moscow’s demand, and utilities have responded to the challenge differently. Large buyers such as Italy’s Eni SpA and Germany’s Uniper SE have said they have found a solution to pay and expect supplies to continue.

Orsted’s payment deadline is Tuesday and the company will continue to pay in euros. “There is a risk that Gazprom Export will stop supplying gas to Orsted,” he said.

Countries can still receive Russian liquefied natural gas, as Putin’s ruble demands cover only Gazprom’s supplies. All of them have also said that they can get by without the fuel using alternatives.

The interruption of supply to GasTerra means that about 2 billion cubic meters of gas will not be delivered between now and October 1, when the company’s contract with the Russian energy giant was due to expire, the Dutch firm said.

That’s just over 1 percent of Russia’s total supplies to the European Union over the past year.

Orsted has a long-term contract with Gazprom for 20 terawatt hours a year, or about 1.9 billion cubic meters, which is set to expire within the decade. While that is only a fraction of EU gas imports, it represents more than 80% of the 24 terawatt hours of the fuel that Denmark imported from Moscow in the same period.

Denmark and the Netherlands also rely on domestic production, which has been declining for years and is not enough to fully cover consumption.

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