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Finland’s Gasum seeks arbitration in payment-terms dispute with Gazprom

The dispute between Finland and Russia over natural gas payments has intensified

Finland’s Gasum seeks arbitration in payment-terms dispute with Gazprom

Helsinki, May 18 - Neftegaz.RU. According to Helsinki Times, the Finnish state-owned importer and distributor of gas Gasum revealed yesterday it is taking its gas supply contract to arbitration over the unilateral payment-related demands made by Russia’s Gazprom Export.

The company stated in a press release:
  • Gasum does not accept Gazprom Export’s requirement to switch to ruble payments and will consequently not make payments in rubles or under the proposed payment arrangement
  • In addition, the companies are in significant dispute over other claims submitted under the contract
Gazprom has asked Gasum to respond to its demands by Friday, 20 May.
Helsingin Sanomat has reported that the same deadline has been given to gas buyers in other parts of the EU.

It is possible that the disagreement results in the discontinuation of gas deliveries from Russia to Finland on Saturday, according to Gasum.
The Finnish gas infrastructure – namely, the LNG terminal ships and the gas pipeline between Finland and Estonia – is not believed to suffice to compensate for the possible cutting off of gas supply from Russia.

Gasum stated that it has prepared for the possibility in co-operation with its clients and security-of-supply authorities.
Mika Wiljanen, the CEO of Gasum, said to Helsingin Sanomat:
  • We’re able to utilise various purchase channels and store gas to meet the acute needs of our clients in the summer season, assuming there are no challenges with the distribution capacity
  • Challenges will arise later in the winter, when the limitation will be the capacity of the Baltic Connector pipeline between Finland and Estonia
He declined to disclose the amount of gas stored to guard against disruptions, citing the sensitivity of the issue.
Helsingin Sanomat highlighted in its report that gas is not as critical for Finland as it is for many countries in, for instance, Central and Southern Europe.

Gas accounted for only 5% of total energy consumption in the country last year and, in energy production, it can be replaced fairly easily with other fuels.
Finnish authorities have indicated their readiness to resort to special measures to guarantee the availability of gas for households that use gas for heating.

The discontinuation of gas imports would cause problems for industries, though.
2/3 of gas in the country is used by industries, chiefly by the chemicals and forest industries, as a process raw material.

Wiljanen said Gasum had no choice but to recourse to arbitration.
He underlined in the press release:
  • We will do our utmost to be able to supply our Finnish customers with the energy they need
Russia last weekend halted electricity exports to Finland, citing «difficulties in receiving payments for electricity sold to the market».
Fingrid, the power transmission system operator in Finland, has estimated that the suspension of electricity imports should lead to no significant increases in electricity prices.

Author: Aleksi Teivainen

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