Kremlin to cut its supply of natural gas to Finland

Russia will cut off natural gas to Finland after the Nordic country that applied for NATO membership this week refused President Vladimir Putin’s demand to pay in rubles, the Finnish state-owned energy company said Friday, the latest escalation over European energy amid the war in Ukraine.

Finland is the latest country to lose the energy supply, which is used to generate electricity and power industry, after rejecting Russia’s decree. Poland and Bulgaria were cut off late last month but, along with Finland, were relatively minor customers who had prepared to move away from Russian natural gas.

Putin has declared that “unfriendly foreign buyers” open two accounts in state-owned Gazprombank, one to pay in euros and dollars as specified in contracts and another in rubles. Italian energy company Eni said this week that it was “starting procedures” to open a euro and a ruble account.

The European Commission, the European Union’s executive arm, has said the system does not violate EU sanctions if countries make a payment in the currency listed in their contracts and then formally signal that the payment process is concluded. But it says opening a second account in rubles would breach sanctions.

That has left countries scrambling to decide what to do next.

Analysts say the EU stance is ambiguous enough to allow the Kremlin to keep trying to undermine unity among the 27 member countries — but losing major European customers like Italy and Germany would cost Russia heavily. It comes as Europe tries to reduce its dependency on Russian oil and gas to avoid pouring hundreds of millions into Putin’s war chest each day but build enough reserves before winter from scarce worldwide supplies. Finland re- fused the new payment system, with energy company Gasum saying its supply from Russia would be halted Saturday.

CEO Mika Wiljanen called the cut-off “highly regrettable.”

But “provided that there will be no disruptions in the gas transmission network, we will be able to supply all our cus- tomers with gas in the coming months,” Wiljanen said.

Natural gas accounted for just six per cent of Finland’s total energy consumption in 2020, Finnish broadcaster YLE said. Almost all of that gas came from Russia. That pales in compari- son to big importers like Italy and Germany, which get 40 per cent and 35 per cent of their gas from Russia, respectively.

According to Finland’s Ga- sum, Russian state-owned Gaz- prom said in April that future payments in its supply contract must be made in rubles instead of euros.