Gazprom, the Russian energy major, announced Tuesday it has halted natural gas supply to the Netherlands.
It said the development came after the gas trader GasTerra, the Dutch company, failed to pay for gas supplied in April and refused to pay in roubles.
“Gazprom completely suspends gas supplies to Netherlands’ GasTerra B.V. due to failure to pay in roubles,” the Russian energy major said in a statement on Tuesday.
Gazprom had earlier demanded that European countries pay for Russian gas supplies in roubles because of sanctions imposed over Moscow’s invasion of Ukraine.
In mid-March, Russian President Vladimir Putin announced that in future he would only sell Russian gas to “unfriendly” states in exchange for roubles.
Mr Putin justified his rouble initiative with the fact that “in violation of the norms of international law, the foreign exchange reserves of the Bank of Russia were frozen by the member states of the European Union (EU).”
The group of G7 economic powers and the European Union as a whole have rejected payments in roubles and accused Russia of breach of contract.
“As of the end of the working day on May 30, Gazprom Export did not yet receive a payment from GasTerra B.V. for the gas supplied in April, which was to be made in compliance with the Russian President’s Decree No. 172 dated March 31, 2022.
“Payments for gas supplied since April 1 must be made in rubles via new account details, of which the counterparties were duly informed,” Gazprom said in the statement.
On Monday the Dutch company GasTerra announced it will not go along with Gazprom’s payment demands.
“Dutch gas trader GasTerra has decided not to comply with Gazprom’s one-sided payment requirements. These payment requirements are set out in a decree passed by Russian President Vladimir Putin regarding payment for the supply of Russian gas,” it said in a statement.
The Dutch company said in a decree issued on March 31, that Russian President Putin stated that, from now on, Russian gas would have to be paid for in rubles.
“This means that anyone wanting to buy gas would have to open both a euro and a roubles account with Gazprombank in Moscow.
“GasTerra will not go along with Gazprom’s payment demands.
“This is because to do so would risk breaching sanctions imposed by the EU and 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 pose too great a risk for the Groningen company.
“The cessation of supply by Gazprom means that between now and 1 October 2022, the date on which the contract ends, approximately 2 billion m3 of contracted gas will not be delivered. GasTerra has anticipated this by buying gas from other providers.
“GasTerra has repeatedly urged Gazprom to respect the contractually agreed payment structure and supply obligations, but to no avail,” it said.
In response to GasTerra’s decision, Gazprom declared to discontinue supply with effect from May 31.
In April, Russia cut gas deliveries to Bulgaria and Poland and in May, Finland was cut off also.