Energy

Russia Prepares To Cut Gas Supplies To Finland Days After NATO Application


Topline

Finland will be cut off from Russian gas after it refused demands to pay in rubles, Finnish state-owned firm Gasum said on Friday, just days after the Nordic country formally set aside decades of neutrality and applied to join NATO.

Key Facts

Russia’s Gazprom told Gasum that Finland’s gas supplies will be halted early Saturday morning, Gasum said in a statement.

Gasum chief executive Mika Wiljanen described the situation as “highly regrettable” but said the company has “been carefully preparing for this situation” and will be able to supply all customers “in the coming months.”

Barring other disruptions, Gasum said it will use the Balticconnector pipeline connecting Finland and Estonia to supply natural gas from other sources.

What We Don’t Know

Why Russia cut off Finland’s gas. Gasum did not give a reason for Gazprom—which is mostly owned by the Russian state—cutting off its gas supplies. The company has refused to cede to Moscow’s demands to pay for gas in rubles and on Tuesday said it was taking Gazprom Export to arbitration over the issue. Wiljanen said Gasum “had no choice but to take the contract to arbitration” and on Wednesday Gasum said there was a “real risk” of gas supplies being cut on Friday or Saturday. Finland is not the only country to refuse to pay in rubles, however, and the announcement comes two days after the country formally asked to join NATO, something Russian President Vladimir Putin said would damage relations with Russia and risk retaliation.

Key Background

Putin has demanded countries pay for Russian gas—one of its biggest exports and a major source of income for Moscow—in rubles as a means of softening the impact of Western sanctions and propping up the currency. Finland is the third country to be excised from Russian supplies, joining Bulgaria and Poland. Russia stopped the flow of gas there in late April after both countries refused to make payments in rubles. Europe relies heavily on Russian energy exports and the bloc has struggled to impose sanctions targeting the sector over this reliance. Poland and Bulgaria both rely heavily on Russian gas, which accounts for around 46% and 90% of gas, respectively, according to the Polish think tank Forum Energii and Politico. Finland, however, is significantly less reliant on Russia for its gas—it makes up around 6% of the country’s overall usage, which is primarily from industry—and the economic impact of losing its supplies is likely to be limited.

Further Reading

NATO application puts Finland’s Russian trade on thin ice (DW)

Finland And Sweden’s NATO Bids Have ‘Complete Backing’ Of U.S., Biden Says (Forbes)

Russia’s Gazprom Cuts Gas Supplies To Poland And Bulgaria (Forbes)



Source link

businesscable.co.uk

Leave a Reply