Finland will join the list of European countries to which Russia has completely cut off its gas supplies for refusing to accept its ruble payment system on Saturday. The Russian state gas company Gazprom has notified the Finnish company Gasum that it will no longer pump this resource from seven in the morning, local time, this Saturday. “We have been carefully preparing for this situation,” said CEO Mika Wiljanen in a statement. The announcement comes two days after the Finnish and Swedish ambassadors to NATO delivered the application for both countries to join the Alliance, a decision that the Kremlin see as a blow that they threaten to respond to.
The gas cut to Finland by Moscow joins the one already suffered by Poland and Bulgaria. The impact of this initiative for the Nordic country will be small, but the measure is a warning to other European countries that refuse to convert their next payment dues to rubles. Although Helsinki imports practically all its gas from Russia, this resource barely represented 6% of the country’s total energy consumption in the third quarter of last year, according to the Finnish statistical agency.
The offensive unleashed on Ukraine by the Kremlin has totally altered relations between the two countries. Not only has Helsinki applied to join NATO to protect itself from its neighbor, but it has also embarked on a path to abolish its energy dependency on Moscow, like the rest of the European Union.
Beyond gas, a third of the energy Finland consumes comes from Russia, according to Finnish Energy, a lobby which brings together some 260 companies in the sector. Its biggest problem is that the government of Vladimir Putin has prohibited the export of wood until the end of the year, and the European Union agreed at the same time not to buy Russian coal from August.
28% of the energy that Finland consumes comes from wood, and a quarter of forest chips are imported from abroad, almost all from Russia (80%). “This can be replaced by domestic supply or other sources, but it will have limitations and transport distances and costs will increase,” warns the lobbywhich sees fewer problems in replacing coal, which represents 6% of total energy consumption.
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Regarding the possible shortage of gas, Gasum sent a reassuring message to its clients for the summer. “Starting tomorrow we will supply natural gas from other sources through the Balticconnector pipeline [un gasoducto entre Finlandia y Estonia]”, the company underlined in its statement.
A collateral effect of the sanctions against Russia has been the cut off by Moscow a few days ago of the electricity supply to Finland because its operator RAO Nordic failed to pay the Russian banks. Several Russian financial entities have been banned by the West for the attack on Ukraine, while Visa, Mastercard and the Chinese Union Pay stopped operating in the Eurasian country.
A system to circumvent sanctions
Gasum thus follows in the footsteps of the Polish and Bulgarian gas companies, which in April refused to open a special account in Gazprom’s financial subsidiary, Gazprombank, to pay for their supplies. This is part of the system devised by the Kremlin to circumvent sanctions and convert euro and dollar maturities into rubles. The mechanism is that customers pay their payments to the bank in the currency agreed by contract, and this entity acts as a mediator and exchanges the money for rubles on the Moscow Stock Exchange before delivering it to the gas company.
The Russian president, Vladimir Putin, decreed at the end of March the obligation to charge in rubles for the gas that his gas monopoly exports. Neither Gazprombank nor gas are subject to sanctions, unlike coal and other Russian banks. However, the European countries and the G-7 reject this payment mechanism because they consider it to be a violation of their contracts and leaves them unprotected in the event of litigating in the future with Gazprom for any problem with the operations.
Putin’s spokesman responded emphatically to questions about the gas cut to Finland. “Obviously, no one is going to supply it for free to anyone,” said Dmitri Peskov. The European Union has proposed to cut two-thirds of its imports of Russian gas before the end of the year, and the Kremlin has responded with interruptions in the pumping of this resource. Not only has Gazprom’s supply to Bulgaria and Poland been cut off since last April 27 for not paying in rubles, but Moscow has also responded to the sanctions by putting the former subsidiaries of its gas company in Europe on its own list of counter-sanctions. .
The consequence of this measure is that Gazprom stopped sending gas through its Yamal-Europe gas pipeline in mid-May because one of its sections is owned by its former Polish subsidiary, of which it lost control due to sanctions. Also, there could soon be litigation with other pipelines and gas reservoirs previously owned by Gazprom.
In addition to these cuts, Ukraine accuses Russia of having forced a reduction in its supply to the community bloc through its territory. The Operator of the Gas Transmission System of Ukraine (GTSOU) asked Gazprom a week ago to divert gas flow from one of the entrances of the Soyuz gas pipeline, the Sojranivka station, to another, the Sudya, because it has detected that the separatists steal part of its flow after being taken over by the Russians.
“GTSOU has always been committed to fulfilling its obligations in delivering gas to the European Union, even in such an extraordinary situation as the war in Ukraine. Due to the Russian occupation and the actions of its military administration, these unauthorized gas extractions make it impossible to guarantee transit to the bloc”, sources from the Ukrainian operator explained to EL PAÍS.
Despite the animosity with the community bloc and kyiv, Moscow is taking special care not to bomb the gas pipeline that crosses Ukraine to Europe. “The strategic gas pipelines have not been damaged by the hostilities and their transit now serves us as a kind of ‘energy air defense’. We observe that the Russian army does not purposely destroy the key infrastructure for gas transportation”, they have told this newspaper from the Ukrainian operator.
Half of the income that Russia obtains from its exports comes from hydrocarbons. Last year its budget obtained more than 52,000 million euros from the sale of gas. This resource, considered by Brussels as an instrument of political pressure, has proven to be a double-edged sword.
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