Denmark still refusing to pay for Russian gas in rubles, risks supplies being cut
MOSCOW. May 30 (Interfax) -Orsted continues to reject a demand to pay for Russian gas in rubles and risks those supplies being cut, the Danish energy company said in a press release.
"Gazprom Export continues to demand that Orsted pays for gas supplies in rubles. We have no legal obligation under the contract to do so, and we have repeatedly informed Gazprom Export that we will not do so. The payment deadline is May 31 and Osted will continue to pay in euros," the company said. "Therefore, there is a risk that Gazprom Export will stop supplying gas to Orsted. In Orsted's view, this will be a breach of contract," it said.
There is no gas pipeline going directly from Russia to Denmark, so Russia will not be able to directly cut off the gas supplies to Denmark, and it will still be possible for Denmark to get gas, Orsted said.
Gazprom signed a 20-year agreement with Dong Naturgas A/S, as Orsted used to be known, to supply gas along the Nord Stream pipeline back in 2006. The supplies began on November 8, 2021 when Nord Stream's first line went into service.
Denmark buys around 1.9 billion cubic meters of Russian gas per year.
New payment system
Russian President Vladimir Putin signed a decree (No. 172) on March 31 on a "special procedure for foreign buyers' fulfilment of obligations to Russian suppliers of natural gas," under which payment for Russian pipeline gas supplied after April 1 to foreign counterparties specified in the decree must be made only in rubles.
Under this procedure, special "K" type ruble and foreign currency accounts are opened at the authorized financial institution, Gazprombank (GPB) , for foreign buyers. These accounts prohibit the suspension of transactions, freezing or debit of funds as part of foreign buyer's fulfillment of obligations that are not related to payment on contracts to supply natural gas. Foreign buyers pay for gas in the currency of the contract, which the bank then sells on the Moscow Exchange and transfers rubles to Gazprom. This is the point at which payment for the gas is considered to be completed.
If this condition is not met, gas supplies will be suspended. Further gas supplies are prohibited if the payment deadline for gas supplied under a contract has expired but the foreign buyer did not make the payment or made it in foreign currency, not in the full amount or not to the account at the authorized bank.
Russia has already suspended gas supplies to Poland, Bulgaria and Finland because they refused to comply with the new payment system.