Russian state-owned fuel company Gazprom has cut off natural gas deliveries to the Netherlands, as Russian President Vladimir Putin enforced his ultimatum that payments for Russian natural gas must be made in rubles. The Netherlands is currently the largest country to be cut off because of the ultimatum.
On May 31, Gazprom ceased shipments of natural gas to its Dutch equivalent GasTerra, after the latter refused to make payments for Russian natural gas in rubles, Russia’s fiat currency, as stipulated by the ultimatum.
GasTerra is half-owned by the Dutch state, with 25 shares owned by Shell and Exxon, respectively. The company refused to comply with Russia’s demands for payment in rubles, which would have required GasTerra to open two accounts with Gazprombank in Moscow: one dealing in rubles and one dealing in euros. GasTerra stated that it refused Putin’s demands out of concern that it might breach international sanctions and incur financial and operational risks.
With the new announcement, the Netherlands joins a small, but growing contingent of European countries with Russian natural gas supplies that have been suspended. Bulgaria, Finland, and Poland have all had natural gas supplies from Russia suspended for refusing to pay in rubles, with Denmark likely to follow.
Notably absent from this club are the largest economies of Western Europe. The Netherlands is currently the only economy larger than $1 trillion annual gross domestic product (GDP) to be cut off from Russian gas supplies. At present, Russia hasn’t cut off gas exports to France, Italy, or Spain.
Germany, Europe’s largest economy at $4.3 trillion annual GDP, is notably dependent on Russian gas after the dismantling of its nuclear energy program in the past decade. Since Russia’s invasion of Ukraine last February, German policymakers have scrambled to reduce the country’s dependence on Russian fuels.
