Russian gas supply halted in May over ruble dispute
The arbitral tribunal supported Gasum for the payments
The court ordered the continuation of bilateral negotiations
Finland’s Gasum said on November 16 that it would continue bilateral negotiations with Russia’s Gazprom Export over the companies’ gas supply contract following an order from an arbitration tribunal.
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Gasum’s Russian gas supply was cut off on May 21 after the Finnish company refused to comply with the terms of the new Moscow ruble-based payment mechanism.
Gasum took the matter to arbitration, saying it did not agree to the changed payment terms. He said there were also other disputes over the parties’ long-term contract.
The court issued its decision on the case on November 14. “According to the award, Gasum is not obliged to pay in rubles or by the proposed payment procedure,” the company said.
“Furthermore, the court ordered Gasum and Gazprom Export to continue their bilateral contract negotiations to resolve the current situation,” he said.
Gazprom Export could not be reached for comment on November 16.
Gasum said deliveries of Russian gas under the existing supply contract would not resume “for the time being”.
Finland was historically dependent on Russian gas imports and Gazprom supplied 1.49 bcm of gas to the country in 2021.
Since the shutdown in May, Finland has been importing gas via the Balticconnector link with Estonia, which gives Finland access to regasified LNG entering the region via Lithuania as well as gas stored in Latvia.
Finland is also expected to deploy a 5bcm/yr floating LNG import terminal at the port of Inkoo next month, with the first commercial LNG deliveries expected in January.
Dispute over the ruble
Gasum was one of the few companies whose Russian gas supplies were cut off because of the rouble.
The first companies to lose access to Russian gas were Bulgarian Bulgargaz and Poland’s PGNiG on April 27, followed by Gasum on May 21.
Deliveries were also halted on May 31 to Dutch trader GasTerra and on June 1 to Danish Orsted and Shell, whose contract was to supply Russian gas to Germany.
In addition to the cuts, Russia has gradually implemented further reductions in gas supply to Europe until 2022, halting deliveries via Nord Stream and Yamal-Europe, and reducing exports via the Ukraine.
Much lower Russian deliveries pushed European gas prices to record highs in late August.
Platts, part of S&P Global Commodity Insights, priced the Dutch TTF benchmark price in the month ahead at a record high of 319.98 euros/MWh on August 26.
Prices have weakened in recent months due to healthy gas inventories and demand reductions, but are still historically high, with Platts pricing the TTF price for the month ahead at 122.48 euros/MWh on November 15.
Russian President Vladimir Putin signed the decree in March obliging EU buyers to pay in rubles for Russian gas via a new currency conversion mechanism, or face having their supplies suspended.
A number of European buyers of Russian gas have accepted the new system, opening the relevant accounts with Gazprombank to enable the conversion of gas payment into rubles.