The Netherlands will no longer receive natural gas from Russia’s Gazprom from Tuesday after its partly state-owned energy firm GasTerra refused to agree to Moscow’s demands for payment in rubles, the two companies said Monday.
Moscow has asked countries it deems “unfriendly” – including European Union member states – to pay for gas in rubles, a way to sidestep Western financial sanctions against its central bank over the Feb. 24 invasion of Ukraine.
GasTerra, which buys and trades gas on behalf of the Dutch government, said it had “decided not to comply with Gazprom’s unilateral payment requirements,” which involved the setting up of accounts that would be paid in euros and then swapped for rubles.
The company’s statement said such measures could violate European Union sanctions and also said the payment route presented too many financial and operational risks.
A statement from Gazprom said that its suspension of gas supplies to GasTerra will continue until payments are settled in line with the Russia-proposed scheme.
“In response to this decision by GasTerra, Gazprom has announced that it will discontinue supply with effect from May 31, 2022,” it said.
GasTerra said it had contracted elsewhere for the 2 billion cubic meters (bcm) of gas it had expected to receive from Gazprom through October.
The company is 50% owned by Dutch government entities and 25% each by Shell and Exxon.
“We understand GasTerra’s decision not to agree to Gazprom’s unilaterally imposed payment conditions,” Dutch Climate and Energy Minister Rob Jetten wrote on Twitter. “This decision will have no consequences for the physical delivery of gas to Dutch households.”
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 in May.
The Dutch rely on Russia for around 15% of their gas supplies, amounting to some 6 bcm a year, the government says.
This is lower than the EU average of 40%, but like other European countries the Netherlands is scrambling to reduce its dependence on Russian energy.
Dutch Prime Minister Mark Rutte, who arrived in Brussels on Monday for an EU summit, where leaders are struggling to agree on a Russian oil embargo, insisted that his country did not have an energy security issue.
“I think there is not a big issue about the Dutch energy security, of course, we are all working on making sure that we stay stable in terms of our energy supply,” he told reporters.
GasTerra said that it had repeatedly asked Gazprom to adhere to its contractual payment methods and delivery obligations.
“It is not possible to say in advance what impact the dropping off of 2 bcm of Russian gas will have on the supply and demand situation in the European market,” the Dutch company added.
Economy Affairs Ministry spokesperson Pieter ten Bruggencate said the Netherlands would not initiate its emergency gas plan to ask industrial users to reduce consumption.
“This is not yet seen as a threat to supplies,” he said.
A spokesperson for the country’s national grid operator, Gasunie, said it does not expect disruption to the grid as a result of Gazprom ceasing deliveries to GasTerra.
The Dutch government has already delayed the closure of a huge gas field in the northern province of Groningen, which has suffered repeated earthquakes due to gas extraction, to cope with the energy crisis.
