Russia is set to cut off the Natural gas supply to the Netherlands and is going to do the same with Denmark. Find out below why that is?
The Natural gas supply is being cut off to the Netherlands by Gazprom because they refused to give the natural gas payments in rubles. Gazprom is a Russian energy company headquartered in the Lakhta Centre, Saint Petersburg.
On 31st March 2022, the president of Russia, Vladimir Putin, decided to demand natural gas payments in Ruble. They chose this to entail opening a euro and ruble account with Gazprombank in Moscow to process payments.
Once the payments received in rubles, the lender can make the foreign exchange conversion.
But the Netherlands rejected the demand of making gas payments in Ruble. Actually, a Dutch trader GasTerra refused to pay in rubles. As a result, Gazprom is set off to cut natural gas supply to the Netherlands on Tuesday.
Gasterra is a Dutch company active in worldwide trading and natural gas supply. Gasterra said that there is no question that we go along with Gazprom’s payment demands in Ruble.
Why did the Netherlands Refuse The Demand For Natural Gas Payments in Ruble?
According to the European Commission, natural gas payments in rubles represent a sanction breach. Also, there are a lot of financial and operational risks associated with the payments in Ruble.
They said opening accounts in Moscow under Russian law and the control by the Russian regime pose a significant risk. As a result, Gazprom has announced to discontinue natural gas supply from Tuesday.
The Dutch Government understands the decision of Gasterra not to pay the gas bills in Ruble.
Are There Any Consequences The Netherlands Faces After Russia Cuts Off The Natural Gas Supply?
The Dutch Climate and Energy minister, Job Jetten took to Twitter and said the Netherlands has to face no consequences after rejecting the demand as they rely on Russia for only 15% of its gas supplies.
They have enough gas reserves for the short term and plan to import more liquified natural gas from other countries. However, for the past couple of months, the Netherlands has been preparing for a complete gas cut by doubling its capacity to import liquefied natural gas.
They have also launched an energy-saving campaign for businesses, households and the government.
Denmark is Going To Be Next
A Danish power company based in Denmark, Orsted, also warns about natural gas supply cuts as it refused to pay in rubles. On Monday, Orsted mentioned that they have no obligations under the contract to do so.
They are repeatedly informing Gazprom that they are not going to do such things. However, Orsted decided to continue to pay in Euros. As a result, Gazprom will stop supplying natural gas to Denmark.
The Danish power company also said that there would be no immediate impact from a gas supply cut as they have many emergency plans ready with them.
However, there are many countries whose natural gas supply is already cut, including Poland, Finland and Bulgaria, as they all refuse to pay in rubles.
On the other hand, some major buyers like Germany’s Uniper and Italy’s Eni agreed to the demand for natural gas payments in Ruble.