Ukraine: Russia to cut natural gas from Finland

Copenhagen, Denmark –

Russia will cut off natural gas to Finland after the Nordic country which applied for NATO membership this week refused President Vladimir Putin’s request to pay in rubles, Finland’s state-owned energy company said on Friday, the latest escalation on European energy amid war in Ukraine.

Finland is the latest country to lose energy supply, which is used to generate electricity and the power industry, after rejecting Russia’s decree. Poland and Bulgaria were cut off late last month but, along with Finland, were relatively minor customers who had prepared to move away from Russian natural gas.

Putin said “unfriendly foreign buyers” are opening two accounts in state-owned Gazprombank, one to pay in euros and dollars as specified in the contracts and the other in roubles. Italian energy company Eni said this week it was “initiating procedures” to open an account in euros and roubles.

The European Commission, the European Union’s executive body, said the system does not violate EU sanctions if countries make payment in the currency specified in their contracts and then officially report that the payment process is finished. But he says opening a second ruble account would violate the sanctions.

This left countries scrambling to decide what to do next. Analysts say the EU’s position is ambiguous enough to allow the Kremlin to keep trying to undermine the unity of the 27 member countries, but losing big European customers like Italy and Germany would cost Russia dearly. . It comes as Europe tries to reduce its dependence on Russian oil and gas to avoid pouring hundreds of millions into Putin’s war chest every day, but to build up enough reserves before winter from the scarce world reserves.

Finland has refused the new payment system, with energy company Gasum saying its supply from Russia will be cut off on Saturday.

CEO Mika Wiljanen called the cut “very regrettable”.

But “provided there are no disruptions to the gas transmission network, we will be able to supply all of 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 this gas came from Russia. This pales in comparison to major importers like Italy and Germany, which get 40% and 35% of their gas from Russia, respectively.

According to Finland’s Gasum, Russian energy giant Gazprom said in April that future payments under its supply contract should be made in rubles instead of euros.

The cut was announced the same week that Finland, along with Sweden, applied to join the NATO military organization, marking one of the biggest geopolitical ramifications of the war that could rewrite Europe’s security map. ‘Europe.

The gas cut “has more to do with the sanctions and the fact that they want to be paid in rubles” than with Finland’s NATO bid, said Charly Salonius-Pasternak, an analyst at the Finnish Institute international affairs in Helsinki.

“Russia uses its energy as a weapon in its geopolitical thinking,” he said. “It will have little impact on Finland, which has diversified its energy (sources) in recent years. »

The Helsinki government said on Friday it had signed a 10-year lease for a floating liquefied natural gas terminal in the Gulf of Finland and that the necessary port structures will be built along the coasts of the Nordic country and the Estonia, said Economy Minister Mika Lintila. in a report.

It “will play a major role in securing the gas supply for Finnish industry,” Lintila said. The ship should be ready to operate by next winter.

Finland and Estonia have cooperated to lease the LNG terminal, which will provide enough storage and supply capacity to allow Russian gas to be phased out in neighboring countries, Gasgrid Finland, the transmission grid company, said. A gas pipeline between the neighbors will allow gas to be imported from the Baltic States instead of Russia.

Meanwhile, Italian firm Eni said on Tuesday it was preparing to follow Putin’s decree “in view of the imminent payment due in the coming days”, but disagreed with the changes.

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AP writer Colleen Barry contributed from Milan

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