Finland’s Gasum seeks arbitration over payment terms dispute with Gazprom

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THE DISPUTE between Finland and Russia over natural gas payments has intensified.

Gasum, Finland’s state-owned natural gas importer and distributor, revealed yesterday that it is submitting its natural gas supply contract to arbitration over unilateral payment-related claims made by Russia’s Gazprom Export.

“Gasum does not accept Gazprom Export’s requirement to switch to payments in rubles and will therefore not make payments in rubles or under the proposed payment agreement. Additionally, the companies are in material dispute over other claims submitted under the contract,” the company said in a press release Tuesday.

Gazprom has asked Gasum to respond to its demands by Friday May 20. Helsingin Sanomat reported that the same delay has been granted to buyers of natural gas in other parts of the European Union.

It is possible that the disagreement could lead to the halting of natural gas deliveries from Russia to Finland on Saturday, according to Gasum. The Finnish gas infrastructure – namely the liquefied natural gas terminal vessels and the gas pipeline between Finland and Estonia – does not seem sufficient to compensate for the possible cut in gas supply from Russia.

Gasum said it had prepared for this possibility in cooperation with its customers and security of supply authorities.

“We are able to use various purchasing channels and store gas to meet the acute needs of our customers during the summer season, assuming there are no problems with distribution capacity”, Mika Wiljanen, the CEO of Gasum told Helsingin Sanomat on Tuesday. “Challenges will arise later in the winter, when the limitation will be the capacity of the Baltic Connector gas pipeline between Finland and Estonia.”

He declined to disclose the amount of natural gas stored to guard against disruptions, citing the sensitivity of the issue.

Helsingin Sanomat pointed out in his report that natural gas is not as critical for Finland as for many countries, for example, in central and southern Europe. Gas accounted for only 5% of the country’s total energy consumption last year, and in energy production it can be replaced quite easily by other fuels.

The Finnish authorities have indicated that they are ready to use special measures to guarantee the availability of gas for households that use gas for heating.

Stopping natural gas imports, however, would cause problems for industries. Two-thirds of the country’s natural gas is used by industries, mainly the chemical and forestry industries, as a raw material for transformation.

Wiljanen said Gasum had no choice but to go to arbitration.

“We will do everything we can to be able to provide our Finnish customers with the energy they need,” he said in the statement.

Last weekend, Russia halted its electricity exports to Finland, citing “difficulties in receiving payments for electricity sold on the market”. Fingrid, the electricity transmission system operator in Finland, estimated that the suspension of electricity imports should not lead to a significant increase in electricity prices.

Aleksi Teivainen – HT

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