COPENHAGEN: Russia is cutting natural gas supplies via pipelines to the Netherlands, and Denmark could be next.

       GasTerra BV said shipments were to stop yesterday after it rejected new payment terms imposed by President Vladimir Putin. Gazprom PJSC confirmed the supply cut.

       Denmark’s Orsted A/S said it was preparing for a cut as the company, best known for its wind-power business, refused to cave in.

       Russia imposed new payment terms on European companies, which include opening an account in rubles with Gazprombank. Traders have been closely watching payment disputes, with Gazprom having already stopped supplies to Poland, Bulgaria and Finland as a result.

       “GasTerra will not go along with Gazprom’s payment demands,” the company said in a statement on its website. “This is because to do so would risk breaching sanctions imposed by the European Union (EU) and also because there are too many financial and operational risks associated with the required payment.”

       European nations are split over how to handle Moscow’s demand, and utilities have responded to the challenge differently.

       Major buyers like Italy’s Eni SpA and Germany’s Uniper SE have said they have found a solution to pay and expect supplies to continue.

       Countries can still receive Russian liquefied natural gas as Putin’s demands for rubles covered only supplies from Gazprom.

       They have all also said that they can cope without the fuel using alternatives.

       Still, worries over a potential supply crunch this (northern hemisphere) winter remain. Dutch gas futures for next month, the European benchmark contract, reversed losses, gaining as much as 2.2% after the news of Gazprom’s cut.

       Prices were later unchanged at about ？86.9 (RM408) a megawatt-hour.

       The halt in supplies to GasTerra means about two billion cubic metres of gas won’t be delivered between now and Oct 1, when the company’s contract with the Russian energy giant was set to expire, the Dutch firm said.

       That’s just over 1% of Russia’s total supplies to the European Union last year.

       “The European gas market is highly integrated and extensive,” GasTerra said.

       “However, it is impossible to predict how the lost supply of two billion cubic metres of Russian gas will affect the supply/demand situation and whether the European market can absorb this loss of supply without serious consequences.”

       Orsted has a long-term contract for 20 terawatt-hours a year, or about 1.9 billion cubic metres, with Gazprom that’s set to expire at the end of the decade.

       While that’s just a fraction of the EU’s gas imports, it accounts for more than 80% of the 24 terawatt hours of the fuel that Denmark imported from Moscow in the same period.

       Overall, Denmark’s gas imports make up a relatively small portion of European demand so that shouldn’t be too difficult to source in the market, according to BloombergNEF analyst Stefan Ulrich. Orsted had already said it planned to buy far less than the maximum allowed by the contract.

       Denmark and the Netherlands also rely on domestic production, but that’s been declining for years and is not enough to cover consumption in full. — Bloomberg