【Text/Observer Network Zhou Yibo】
On April 30, local time, Finland's Helsinki News reported that the Finnish government and enterprises are preparing for the possible interruption of Russian gas supply on May 21, and the risk of being cut off by russia has been determined to be "real".
Gazprom (Gazprom) has asked Finland's state gas company Gasum to respond to the "ruble payment order" by May 20. Another EU source revealed that many other EU countries have been informed of the same "deadline".
However, both the European Commission and the Finnish government have taken a negative view of Russia's demands. This means that Russian gas shipments to Finland and much of Europe could be cut off on May 21. Finland's dependence on Russian gas is more than 90%, and two-thirds of its natural gas is used in industry. Finnish officials estimate that the current gas facilities are not enough to fill the gap after the Russian supply cut, and the affected industries will either find alternatives to natural gas or reduce production.
Screenshot of the Helsinki News report
At the end of March this year, in response to Western sanctions, Russia issued a "ruble settlement order" in the energy field to fight back, that is, requiring companies from "non-friendly countries" to open ruble accounts in Russian banks first, and then pay for russian gas purchases through this account.
Russian President Vladimir Putin said that if these countries refuse to pay in rubles, it will be considered a breach of contract and "the buyer will be responsible for all the consequences".
The Helsinki News noted that agreeing to Russia's payment requirements was a necessary condition for obtaining a continuous supply from Gazprom. Earlier this week, Poland and Bulgaria had been cut off by Russia from Gazprom supplies.
According to Reuters and Bloomberg, Gazprom once clearly informed Poland and Bulgaria that it would stop supplying natural gas to these two countries on April 27.
According to the Helsinki News, Finland's state-owned gas company Gasum has also received a "deadline" from Gazprom to respond to the "ruble payment order" by May 20. Another EU source revealed that many other EU countries have received similar notifications.
However, Finland's official attitude is as firm as Poland's, and Finland's Minister for European Affairs and Corporate Governance, Titi Tuplinen, has made it clear that Gasum cannot agree to The Russians' payment demands.
According to the "Russia Today" (RT) report on the 27th, Tuplinen also said that Finland had made a decision not to agree to pay in rubles in early April, and she also accused the "ruble payment order" of being part of Russia's geopolitics.
According to the Helsinki News, the specific requirements of the Russian side are that European gas buyers must open two accounts at Gazprombank, a subsidiary of Gazprombank, one for the euro and one for the ruble.
Gas buyers can pay gas bills in euros as they used to, with Roscromometer taking care of currency conversion and transferring funds to a ruble account. At the same time, only after the funds reach the ruble account can the buyer's payment be considered successful.
In this regard, the European Commission believes that the euro payments of these companies were held by the Russian central bank in the nature of "loans" before they were converted into rubles, which violated the EU sanctions that prohibit any transactions with the Russian central bank.
The European Commission also believes that Russia has not set any restrictions on the period for exchanging euros into rubles, which makes the question of how long the Central Bank of Russia holds euros payments from European companies another risk – which is one of the reasons why Bulgaria refuses to accept the "ruble payment order".
For Finland, Gazprom also made an additional request: Gasum's euro payments are not exchanged by Gazprom, but by the company itself converted into rubles and transferred to the ruble account – which will cause Gasum to have to pay Russia directly in rubles, which has been rejected in advance by Western countries.
Finnish Minister of European Affairs and Corporate Governance Titi Tuplinen Source: Helsinki News
The Helsinki News reported that Finland's official refusal to respond to Russia means that Russian gas exports to Finland and much of Europe could be cut off on May 21.
This does not mean that Finland's natural gas will be immediately interrupted: on the one hand, the pipeline itself is a short-term storage facility for natural gas; on the other hand, Finland has other gas supply channels.
According to official Finnish estimates, Finland's current gas infrastructure includes Estonian gas pipelines and LNG terminals, but the supply of both is still insufficient to fill the gap after the Russian gas supply cut.
In December 2019, the Baltic Gas Pipeline between Finland and Estonia was put into operation, which connects Finland to Latvia's gas storage facilities and Lithuanian terminals through Estonia.
However, the supply capacity of this gas pipeline is significantly lower than that of the Imatran gas pipeline, which is connected to Russia, and in 2021, three-quarters of Finland's natural gas imports will be transported through the latter, and only a quarter of the gas will be transported through the former.
Finland's LNG terminal will not be officially operational until October this year, but the report notes that the supply of gas from the channel is not high.
Schematic diagram of a gas pipeline in Finland, with the red circle part of the Estonian gas pipeline connected to Russia
Compared with Central and Southern European countries, natural gas is reported to be a small share of Finland's energy mix and is also very tolerant of being replaced by other fuels. In 2021, natural gas will account for only about 5% of Finland's total energy consumption.
But in the industrial sector, companies that use natural gas as a raw material for production will face difficulties. Two-thirds of Finland's natural gas is used in industry, with the country's chemical companies making the biggest use. At the same time, Finland's dependence on Russian gas is more than 90%.
According to Finnish official estimates, if the Russian gas pipeline is closed, industrial gas supply may not be guaranteed in all cases. The industry will either find alternatives to natural gas or reduce production.
Some Finnish companies are also bracing for a gas supply disruption. Neste, a refining and oil marketing company and one of the country's largest natural gas users, said it had tried to use propane instead of natural gas as a raw material for production.
But the Helsinki News pointed out that on the one hand, Finnish companies have the responsibility to prepare for the supply of Gazprom on their own; on the other hand, the difficulty of natural gas substitution depends on the company's own production process.
Finnish power plant gas turbines (left) with the refinery of Finnish refining and oil marketing company Nast Image source: Helsinki News
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