Denmark’s Ørsted says Russia could cut country’s gas supplies

Danish energy company Ørsted has warned Russia could cut gas supplies to Denmark after it refused to pay in rubles, adding that gas could still be secured through the European market.

gas cooker
Danish company Ørsted says it can find alternative ways of supplying gas to homes if Russia cuts deliveries to Denmark. File photo: Emil Helms/Ritzau Scanpix

Ørsted insisted it would continue to pay for gas deliveries from Russia in euros and that the payment deadline was May 31st.

“Gazprom Export continues to demand that Ørsted pays for gas supplies in rubles,” the company said in a statement.

“We have no legal obligation under the contract to do so, and we have repeatedly informed Gazprom Export that we will not do so.

READ ALSO: Danish energy company refuses to pay for Russian gas in rubles

“Therefore, there is a risk that Gazprom Export will stop supplying gas to Ørsted. In Ørsted’s view, this will be a breach of contract,” it added.

The company said Russia could not directly cut off gas supplies to Denmark because there is no direct pipeline between the two countries.

This means the country should still be able to secure gas deliveries by 
purchasing it from the European market.

“We are backing Ørsted in this decision,” Danish Prime Minister Mette Frederiksen told reporters in Brussels, where she is attending an EU summit. She described the Russian demand as “unacceptable”.

Ørsted also said it was filling up its storage facilities in Denmark and Germany to secure gas supplies to their customers.

Russia says it will only accept payment for natural gas deliveries in its national currency, with buyers required to set up ruble accounts or have their taps turned off.

The measure came in response to a litany of international sanctions on Moscow after it invaded Ukraine on February 24th.

On May 21st, Russia halted supplies to its neighbour Finland — which has angered Moscow by seeking NATO membership — after energy group Gasum also refused to pay in rubles.

Moscow had already cut off Poland and Bulgaria.

And on Monday, the partly state-owned Dutch energy firm GasTerra said Gazprom had informed them that it would cut its gas supplies on Tuesday for the same reason.

In April, Denmark’s government announced plans to rid itself of Russian gas, including moving half of the 400,000 households that are heated with gas to district heating networks or electric heat pumps by 2028.

Gas accounts for 18 percent of energy consumed in Denmark each year. 

National production accounted for three quarters of the gas consumed in 2019, with Russia among the main sources of imported natural gas, according to the Danish energy agency.

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Danish energy company suspends fixed rate contracts

A local Danish energy provider has suspended fixed rate contracts with private and business customers.

Danish energy company suspends fixed rate contracts

Recent months have seen both households and companies in Denmark suffer from drastic increases in the price of electricity. The effects are now impacting electricity customers who signed deals to protect themselves against price changes, broadcaster DR reports. 

Electricity provider SK Energy, which is located in the Zealand town of Slagelse, made the decision to suspend fixed rate business and private contract in light of rocketing electricity and gas prices, DR writes.

The decision was described as regrettable but necessary by the company’s CEO Henrik Birch.

“This is a highly unusual situation and I can only deeply apologise for us doing this. But I think we have to do it because we don’t know what will happen this coming winter,” Birch told DR.

The CEO also said he understands customers who feel let down after signing fixed rate contracts to protect themselves against price changes, DR writes. He added he hoped they would understand the nature of the situation.

The changes take effect three months from now.

The average price of electricity in Denmark was in May reported to have climbed 18 percent from the last quarter of 2021 to the first of 2022.

Several factors are behind the upward trend in the price of electricity, but the primary reason is the cost of natural gas, which has multiplied since late 2021. That has resulted in higher overheads for electricity suppliers. Gas supplies from Russia to Europe have meanwhile broken down following the Russian invasion of Ukraine.

READ ALSO: ‘Shop around’: Danish agency as electricity prices climb 18 percent in three months