Russia cuts off gas to Finland in retaliation for NATO membership
Barely 48 hours after Finland formalized together with Sweden its candidacy to join NATO, Russia responds with its first retaliation. The Kremlin will stop its natural gas shipments to Finland as of 7 a.m. this Saturday, confirms the Finnish state-owned gas company Gasum.
The reason given by Vladimir Putin’s regime is that Finland, like Poland and Bulgaria, has refused this week to pay for Russian gas in rubles. Russia and state-owned Gazprom, one of the world’s largest oil and gas companies, have since April 1 demanded that foreign companies wishing to buy Russian oil and gas pay in rubles in an attempt to convert dollars and euros to the Russian currency at a time when international sanctions against Moscow over the Feb. 24 invasion of Ukraine are stifling Russian finances.
Kremlin spokesman Dmitry Peskov assured a press conference that Russia will not supply Finland with gas for free if it does not open a ruble account, a condition that the European Commission has warned violates EU sanctions on Moscow. Finland is thus following in the footsteps of Bulgaria and Poland, whose gas was cut off by Moscow in April.
In the opinion of Gasum CEO Mika Wiljanen, “it is very unfortunate that the supply of natural gas under our supply contract is now stopped.” However, he assured in that “we have been carefully preparing for this situation and, provided there are no disruptions in the gas transmission network, we will be able to supply all our customers with gas in the coming months.”
Gazprom’s decision, however, will have very limited effects on Finnish households. Gas currently accounts for about 5% of Finland’s total energy consumption, although Russia supplies 90% of it. Finland imported about 2.2 billion cubic meters of Russian natural gas in 2021.
Individual households are not particularly dependent on Russian gas, but the forestry and chemical industry and bakeries, among other sectors, are at risk of being affected on a larger scale, says Finnish agency Yle. Bakeries and the forestry industry can substitute gas for oil, but for the chemical industry, which uses gas as a raw material, it is more difficult.
The Finnish government reported yesterday that it had agreed a 10-year contract with U.S.-based Excelerate Energy for a floating storage and regasification vessel (FSRU) to help replace Russian gas supplies. “The LNG terminal will allow us to free ourselves from Russian gas,” advanced Finance Minister, Liberal Annika Saarikko.
To secure gas supplies to its customers during the summer, Gasum plans to import gas from other sources through the Balticconnector pipeline, which links Finland and Estonia. In addition, several industries have prepared for the dreaded shutdown of the Russian tap. Several industries have switched and may use oil or liquefied natural gas as substitutes. In addition, Estonia and Finland plan to install a liquefied natural gas terminal that will make things easier for the Baltic countries.
However, Gasum has warned that transmission capacity on the Balticconnector is deficient. When the reserves are depleted, there is a risk that the capacity will not be sufficient to meet the country’s needs.