The Russian state gas company Gazprom will stop supplying gas to Dutch organization GasTerra with immediate effect, the Dutch firm said on Tuesday. Gazprom tried to enforce a decree by Russian President Vladimir Putin demanding that payment for Russian gas be made in rubles, which GasTerra refused.
The result is that Gazprom will not make good on its agreement to deliver two billion cubic meters of gas between now and October 1. At that time, the Dutch firm’s agreement with Gazprom will expire. GasTerra said it repeatedly asked Gazprom to stick to the terms of the contract, including agreements on delivery and payment processing.
Half of GasTerra is owned by Energie Beheer Nederland, which itself is owned by the Dutch state. A fourth of GasTerra is owned by Shell, and the remainder is held by Esso. “Gas trader GasTerra has decided not to comply with Gazprom’s unilateral payment requirements,” GasTerra said in a statement. “In response to this decision by GasTerra, Gazprom has announced that it will discontinue supply with effect from 31 May 2022.”
GasTerra claimed on Monday that in order to meet Gazprom’s terms, it would have to open an account in euros and another in rubles at the Gazprombank in Moscow. GasTerra said this would likely violate European Union sanctions, and added that there are “too many financial and operational risks” involved with completing payment this way.
“In particular, opening accounts in Moscow under Russian law, controlled by the Russian regime, is too great a risk for the company from Groningen,” GasTerra said.
The Dutch company said it anticipated Gazprom’s decision and bought gas from other sources. “The European gas market is highly integrated and large. It is impossible to say in advance what effect the loss of 2 billion cubic meters of Russian gas will have on the supply/demand situation, and whether the European market can absorb this loss of supply with limited consequences,” GasTerra said.