Russia's Gazprom suspends gas supplies to Finland's Gasum

Russia's Gazprom suspended natural gas supplies to Gasum on May 21 after the Finnish company refused to pay for Russian gas in rubles, the two companies said in separate statements.

Gasum said previously that it will be able to supply all of its customers in coming months with gas imported via the Balticconnector with Estonia.

The cut-off was expected and comes after Bulgaria and Poland refused to comply with the new ruble-based payment decree and were cut off from Russian gas in late April.

Russia's invasion of Ukraine has sparked major concerns about Russian gas supplies to Europe and led to significant price volatility since the conflict began Feb. 24.

The TTF month-ahead price reached a record Eur212.15/MWh on March 8, according to Platts assessments by S&P Global Commodity Insights, and was last assessed May 20 at Eur84.95/MWh.

Sanctions introduced against Russia over the conflict, including seizing of assets abroad, triggered Russian President Vladimir Putin to sign a decree March 31 requiring EU buyers to pay in rubles for Russian gas via a new currency conversion mechanism through Gazprombank. Active fighting also poses the risk of damage to supply infrastructure.

S&P Global Commodity Insights said in a European gas analytics weekly report published May 18 that it maintains the view that large contracts between European buyers and Gazprom will continue due to their importance for both parties.

Some of the EU's biggest buyers of Russian gas, including Uniper, Eni and Engie previously said that they have taken steps to be able to make continued payments for supplies.

On May 17, Gasum said it did not accept Gazprom Export's requirement to switch to ruble payments and would not make payments in rubles or under Gazprom Export's proposed payment arrangement.

It also said that it intends to take Gazprom Export to arbitration over the changed payment terms as well as other disputes over the parties' long-term contract.

Gazprom said that it supplied 1.49 Bcm of gas in Finland in 2021. Finland has historically been almost entirely dependent on gas imports from Russia, but since 2020 has been linked to Estonia via the Balticconnector pipeline.

This means Finland can access regasified LNG entering Lithuania at Klaipeda as well as gas stored in Latvia's Incukalns facility -- the only seasonal gas storage site in the Baltic region.