Eesti Gaas will not be paying in rubles for natural gas

Natural gas terminal.
Natural gas terminal. Source: Eesti Gaas

Gas company Eesti Gaas is not planning on paying Russia's Gazprom in rubles or buying gas from Russia at all in the near future. The company aims to ensure supply security using its reserves and liquified natural gas (LNG) from Klaipeda.

The standard practice on the Baltic market has been to buy major quantities from Russia in the summer when gas is cheaper, with the resource stored at the Incukalns storage facility in Latvia and used in winter when prices are higher. Eesti Gaas would ordinarily pay for May gas deliveries at the end of April, while Russia demands payment in rubles today and no payment will be made.

"The European Union has issued its preliminary position where it calls paying in rubles a problem, which is why European countries and companies have not accepted these ruble payments and neither can we," Eesti Gaas CEO Margus Kaasik said.

Gas deliveries from Russia ended in April. While the March confusion sent companies scrambling to fill tanks, buying gas from Russia no longer made economic sense by April, Kaasik suggested.

The change does not really impact Estonian consumers in the short perspective. Supply will be covered using reserves, while Eesti Gaas will also be buying LNG from Klaipeda. The company has bought gas from Klaipeda before, with Kaasik suggesting traders' interest in selling.

Eesti Gaas also said that the coming months will not affect the price of gas for ordinary customers. "The April price will continue into May and June. The home consumer does not have to worry about the coming months," Kaasik said.

"We are working on finding alternatives. And we are looking for more gas for the summer months. While we have considerable stockpiles, we also definitely need more," he remarked.

"We are searching for a solution. Ultimately, we do not know what will become of the ruble payments demand or Russian exports. The problem is more serious still on the EU level than it is on the local one," Kaasik offered.

Kaasik said that problems could develop by fall as the Klaipeda terminal is not big enough to take care of Incukalns winter stores. "At best, we will have the same amount of gas that we currently have there by winter. But that is less than half the capacity and we're not likely to get any more. The reality today is that we can have no more gas there without Russian deliveries. At least not by any significant volume," the Eesti Gaas CEO admitted.

Kaasik said that he sees a second regional LNG terminal as the only way to ensure gas supply security. "We will be hard-pressed without it," he said.

Russia halted gas exports to Poland and Bulgaria on Wednesday when the countries refused to pay in rubles. Poland has said it will replace a considerable part of Russian gas with LNG. May will see the opening of a gas pipeline between Poland and Lithuania that will allow the former to purchase LNG from Klaipeda. The volumes of FSRU Independence at Klaipeda have been fully booked.


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Editor: Marcus Turovski

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