Gazprom turns off the gas tap in the Netherlands

GasTerra, the Dutch gas wholesale company partially owned by the Dutch state, Royal Dutch Shell and ExxonMobil, has announced that Russian gas giant Gazprom has ceased supplying gas to the Netherlands as of 31 May.

Gazprom is terminating supply of some 2bn m3 of gas to GasTerra because the Dutch firm is refusing to pay in roubles because of EU sanctions.

The Dutch firm said in a statement that it is not clear what the impact of the loss of the Russian gas will have on supply and demand in Europe and whether the European market will be able to “absorb” the loss. But GasTerra also added that it had secured alternative supplies.

“Gas trader GasTerra has decided not to comply with Gazprom’s unilateral payment requirements. These payment requirements are a result of a decree drawn up by Russian President Vladimir Putin on payment for the supply of Russian gas. In response to this decision by GasTerra, Gazprom has announced that it will discontinue supply with effect from 31 May 2022,” stated the Groningen-based firm.

“In the decree announced on 31 March, Russian President Putin stated that from now on Russian gas must be paid in rubles. To do this, the buyer of the gas must open both a euro and a rouble account at the Gazprombank in Moscow. GasTerra does not comply with these payment requirements.

This is because they pose a risk of violation of the sanctions drawn up by the EU, but also because there are too many financial and operational risks associated with the required payment route. In particular, opening accounts in Moscow under Russian law and their control by the Russian regime are too great a risk for the company,” it continues.

GasTerra added that the cessation of supply by Gazprom means that approximately 2bn m3 of contracted gas will not be delivered until 1 October, 2022, when the contract ends. “GasTerra has anticipated this by purchasing gas elsewhere,” it stated.

“The European gas market is highly integrated and large. It is impossible to say in advance what effect the loss of 2bn m3 of Russian gas will have on the supply/demand situation and whether the European market can absorb this loss of supply with limited consequences,” added the Dutch firm.

“GasTerra has repeatedly urged Gazprom to respect the contractually agreed payment structure and delivery obligations, unfortunately to no avail,” it concluded.