Netherlands Tells Its Companies Not to Pay for Gas in Rubles
Netherlands Tells Its Companies Not to Pay for Gas in Rubles
(Bloomberg) -- The Dutch government has told energy companies to refuse new gas-payment terms imposed by Russia, a move that may ratchet up pressure on other European countries to follow suit.
The Netherlands agrees with the European Union’s assessment that accepting the request -- which involves having Russia’s Gazprom PJSC receive payments in rubles -- would be a breach of sanctions, according to a spokesperson for the Dutch Ministry of Economic Affairs and Climate Policy. As a result, Dutch companies will not be allowed to accept the new terms.
President Vladimir Putin wants Europe to pay Gazprom in the Russian currency, a demand energy firms would need to comply by opening two accounts with Gazprombank, one in euros or dollars and one in rubles. The lender would then make the foreign exchange conversion, but companies would only be freed from the debt once Gazprom received the payment in rubles. That would represents a breach of sanctions, according to the European Commission.
“The Dutch government agrees with the conclusion of the European Commission,” the ministry spokesperson told Bloomberg on Thursday. “This means it is not allowed for Dutch companies to agree with these terms.”
Gazprom’s gas exports to the Netherlands are relatively low by regional standards, with supplies to the country representing only about 4% of the Russian gas giant’s shipments to the EU and Turkey in the first half of last year. Still, the move may push other European countries -- many of which have so far refrained from taking a firm stance -- to fall in line.
The Dutch ministry said the Netherlands has been preparing for a full gas cut in the past couple of months, with the country gearing for the “worst case scenario” by doubling its capacity to import liquefied natural gas. It’s also launched an energy-saving campaign targeted at natural gas demand for business, households, and the government, the spokesperson said.
Gazprom supplied 4.2 billion cubic meters of gas to the Netherlands in the first half of last year. Dutch energy firm GasTerra -- which is in the process of being wound down -- has a contract for Russian supplies with Gazprom that expires in October. Utility Eneco buys fuel from Wingas GmbH, a Gazprom unit now under the control of the German government.
Dutch companies also import Russian LNG, which is not subject to the new payment terms. In total, the Netherlands relies on Russia for almost 20% of its gas.
Still, the country would struggle to fill its gas storage sites ahead of next winter without Russia supplies, the ministry spokesperson said.
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