Finland: Russia stops natural gas supplies
COPENHAGEN, Denmark – Russia will cut off natural gas to Finland after the Nordic country that applied for NATO membership this week refused President Vladimir Putin’s demand to pay in rubles, the Finnish state-owned energy company said Friday, the latest escalation over European energy amid the war in Ukraine.
Finland is the latest country to lose the energy supply, used to generate electricity and power industry, after rejecting Russia’s decree. Poland and Bulgaria were cut off last month but had prepared for the loss of gas or are getting supplies from other countries.
Putin has declared that “unfriendly foreign buyers” open two accounts in state-owned Gazprombank, one to pay in euros and dollars as specified in contracts and another in rubles. Italian energy company Eni said this week that it was “starting procedures” to open a euro and a ruble account.
The European Commission, the European Union’s executive arm, has said the system does not violate EU sanctions if countries make a payment in the currency listed in their contracts and then formally signal that the payment process is concluded. But it says opening a second account in rubles would breach sanctions.
That’s left countries scrambling to decide what to do next. Analysts say the EU stance is ambiguous enough to allow the Kremlin to keep trying to undermine unity among the 27 member countries – but losing major European customers like Italy and Germany would cost Russia heavily.
Finland refused the new payment system, with energy company Gasum saying its supply from Russia would be halted Saturday.
CEO Mika Wiljanen called the cutoff “highly regrettable.”
But “provided that there will be no disruptions in the gas transmission network, we will be able to supply all our customers with gas in the coming months,” Wiljanen said.
Natural gas accounted for just 6% of Finland’s total energy consumption in 2020, Finnish broadcaster YLE said. Almost all of that gas came from Russia. Big importers like Italy and Germany get 40% and 35% of their gas from Russia, respectively.
According to Finland’s Gasum, Russian state-owned energy giant Gazprom said in April future payments in its supply contract must be made in rubles instead of euros.
The cutoff was announced the same week that Finland, along with Sweden, applied to join the NATO military organization.
The government in Helsinki said Friday that it had signed a 10-year lease for a floating liquefied natural gas terminal in the Gulf of Finland and that necessary port structures will be built along the coasts of the Nordic country and Estonia, Economy Minister Mika Lintila said in a statement.
Finland and Estonia have been cooperating on renting the LNG terminal ship, which will provide enough storage and supply capacity to allow Russian gas to be abandoned in the neighboring countries, said Gasgrid Finland, the transmission network company. A pipeline between the two will make it possible to import gas from the Baltic states instead of Russia.