Ukraine war: Finland says Russia suspending natural gas supplies

Russia will cut off natural gas to Finland after the Nordic country that applied for Nato membership this week refused President Vladimir Putin’s demand to pay in roubles, the Finnish state-owned energy company said Friday, the latest escalation over European energy amid the war in Ukraine.

Finland is the latest country to lose the energy supply, which is used to generate electricity and power industry, after rejecting Russia’s decree. Poland and Bulgaria were cut off late last month but had prepared for the loss of natural gas or are getting supplies from other countries.

Putin has declared that “unfriendly foreign buyers” open two accounts in state-owned Gazprombank, one to pay in euros and dollars as specified in contracts and another in roubles. Italian energy company Eni said this week that it was “starting procedures” to open a euro and a rouble account.

The European Commission, the European Union’s executive arm, has said the system does not violate EU sanctions if countries make a payment in the currency listed in their contracts and then formally signal that the payment process is concluded. But it says opening a second account in roubles would breach sanctions.

That has left countries scrambling to decide what to do next. Analysts say the EU stance is ambiguous enough to allow the Kremlin to keep trying to undermine unity among the 27 member countries – but losing major European customers like Italy and Germany would cost Russia heavily. It comes as Europe tries to reduce its dependency on Russian oil and gas to avoid pouring hundreds of millions into Putin’s war chest each day but build enough reserves before winter from scarce worldwide supplies.

Finland refused the new payment system, with energy company Gasum saying its supply from Russia would be halted on Saturday.

CEO Mika Wiljanen called the cut-off “highly regrettable.”