1. What exactly is going on?
The Russian state-owned company Gazprom will stop supplying gas to the Netherlands from Wednesday because the Dutch gas company GasTerra refuses to pay in rubles.
The reason for the conflict with Gazprom is Russian President Vladimir Putin’s demand that all energy Russia supplies to Europe should be billed in rubles. GasTerra refuses to comply with this, because this would circumvent the sanctions against Russia.
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It concerns a contract for the supply of gas from 31 May to 1 October. This contract is good for approximately 2 billion cubic meters of gas, which will therefore not be supplied. This equates to approximately 5 percent of the annual gas consumption in the Netherlands.
There are also other companies, such as Eneco, that purchase gas from Gazprom. In total, this concerns 6 billion cubic meters. It is expected that this gas will no longer be supplied, but Eneco itself says that it has a long-term contract.
Expert Aad Correljé of TU Delft expects the current contracts in euros and dollars to continue. “They can just complete it.”
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2. Should we fear that we will run out of gas?
No, at least not in the short term, says gas expert René Peters of TNO. There are alternatives. The gas will probably come from Norway or Algeria, or we will be importing more liquefied gas (LNG).
In this video from last month, we explain the difference between ‘regular’ gas and liquefied gas:
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Because GasTerra has already purchased extra gas, Minister Rob Jetten expects the decision to have no consequences for the ‘physical supply’ of gas. In other words: it is still possible to cook on the gas stove and to take a hot shower.
That is also what expert Peters says, but if this continues for a long time, and other customers are also closed, it can indeed have major consequences. “The Netherlands must ensure that there are sufficient reserves so that we have enough gas in the winter.” Correljé of TU Delft thinks that nothing will happen before the summer, but he does wonder ‘what the winter will do’.
At the moment, the gas storage facilities in our country are far from being completely filled. Only 37 percent of the capacity has been used, writes de Volkskrant today. The EU has said the goal should be to have at least 80 percent full. “We will only see what the consequences can really be in the winter,” says Correljé.
In any case, the gas emergency plan of the Ministry of Economic Affairs (EZK) does not have to be activated yet. This so-called gas protection and recovery plan describes which measures will be taken if a gas crisis is imminent or if it already occurs. It describes, among other things, how gas is distributed when it becomes scarce. That plan will only come into effect if there is a threat of a gas shortage.
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What about other European countries?
The Netherlands is the umpteenth European country where Russian state gas company Gazprom turns off the gas tap. Denmark also warns that the Danish energy company Ørsted may no longer receive gas from Gazprom because the company refuses to pay in rubles.
Poland and Bulgaria, among others, reported last week that the Russians threatened to stop supplying gas, a message that Gazprom later confirmed. However, according to Polish Prime Minister Mateusz Morawiecki, the gas storage facilities in the country are well stocked and Poland is also doing everything it can to get gas from other countries.
Bulgaria and Greece have accelerated the approval of a gas link between the two countries. As a result, Bulgaria will be able to receive Azerbaijani gas to replace Russian gas from July.
Finland was already cut off from Russian natural gas earlier this month because it wants to join the NATO military alliance. Finland now gets its gas from other countries, through a pipeline connecting the country with Estonia. The Finns also signed a deal to rent a large floating platform for liquefied natural gas (LNG).
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3. What does it mean for your energy bill?
In any case, consumers will notice it in their wallets. That while prices have been sky-high for months and continue to rise.
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Gasterra cannot rule out the possibility that higher gas prices will be passed on to consumers, although it will do its best to prevent this. “By anticipating early, we try to minimize the effects on the market,” said a company spokesperson.
Peters thinks it will be a difficult story. “If there really is a serious shortage because the gas taps are closed more widely, there will be a run in Europe on the alternatives. Then prices can really rise significantly and that can last longer,” he warns.
How much the gas bill will go up is anyone’s guess. “But we should not assume that the gas bill will fall in the short term. The suppliers will hold on to the high gas prices for a while”, Peters thinks.
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