Russia Monitor is a review of the most important events related to Russian internal and external security, as well as its foreign policies.
Date: 27 May 2023 Author: Grzegorz Kuczyński
Finland’s Gasum Terminates Long-Term Supply Deal with Gazprom
Finnish state-owned gas wholesaler Gasum is the first European country to have terminated a contract to buy natural gas from Gazprom Export via pipelines from Russia. Other European companies, which still hold legal supply deals with Gazprom, might follow suit.
Finland’s Gasum on May 22 said it had ended a long-term supply deal with Russia’s Gazprom. The contract between the two companies was set to expire in 2031. Gazprom confirmed it had completely stopped gas deliveries in May 2022 as it had not received rouble payments from Gasum. In response, Gasum initiated arbitration proceedings against the Russian gas company. In November 2022 Gazprom said that the award had also called for Gasum to make an outstanding payment of about €300 million for gas delivered from when Gazprom first demanded the payment change and the date when the Russian company halted supplies. An arbitration panel ruled that Gasum could pay in euro. The arbitration tribunal found the Russian president’s order demanding that “unfriendly countries” make rouble payments for Russian gas to be a force majeure, allowing Gasum to terminate the contract. Furthermore, the arbitration ordered the two sides to negotiate to resolve the situation. “The parties were not able to resolve the situation within the period defined by the arbitral tribunal and therefore, Gasum has terminated the long-term natural gas supply contract,” the Finnish company said on May 22 in a statement. Both companies are still negotiating the details of their contract termination. “Gasum will not comment on these details of the contract,” the Finnish gas wholesaler said in a statement. A thorny issue might be payments that Gasum has made under the take-or-pay formula for the remaining years of the contract, according to Kommersant daily. Interestingly, Gasum and Gazprom have a valid deal to supply liquefied natural gas from the Russian Kryogaz-Vysotsk plant. Gasum claims the contract is still valid, but it stopped taking cargoes from the Gazprom-controlled plant. Gasum is not the only European company to be cut from piped Russian gas supplies over its refusal to pay in roubles. The supply deals between Gazprom and other companies, including Poland’s PGNiG, Bulgaria’s Bulgargaz, and Dutch GasTerra, have expired. Most of Gazprom’s biggest customers across Europe agreed to the new payment formula and receive gas, but in installments. This is why Italy’s Eni, France’s Engie, and two German energy firms––Uniper and RWE––started arbitration proceedings after Gazprom cut supplies.
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