Ørsted not bending the knee to Gazprom, says situation will not affect guidance

Danish clean energy group Ørsted A/S (CPH:ORSTED) today warned that, even though this would be a breach of contract, there is a risk that Gazprom Export will stop gas supplies due to Ørsted’s unwillingness to start paying in roubles.

In response to international sanctions over its invasion of Ukraine, Russia has been demanding that “unfriendly” countries pay for gas supplies in roubles rather than in US dollars or euros.

“We have no legal obligation under the contract to do so, and we have repeatedly informed Gazprom Export that we will not do so. The payment deadline is 31 May and Ørsted will continue to pay in Euros,” the company said in a statement.

Ørsted added that due to the fact that there is no direct gas pipeline from Russia to Denmark, Russia will not be able to directly cut off supplies to the Scandinavian country. The company, thus, expects to have the option to buy gas on the European gas market.

The offshore wind major further noted that it has been preparing for the possibility of losing the gas supplies from Gazprom Export and is currently holding talks with authorities about potential scenarios. At the same time, Ørsted is filling up its storage capacity in Denmark and Germany to ensure gas supplies to its customers, which are primarily major corporations at home and in Sweden.

The company stressed that a potential halt of gas supplies will not lead to a revision of its financial forecast for the fiscal year or the estimated investment level for 2022. It will not change its strategic ambition and long-term financial projections either.

In early March, after Russia attacked Ukraine, Ørsted said it had ceased procurement of Russian biomass and coal for its power plants but was still bound by a long-term gas supply contract with a subsidiary of state-owned PJSC Gazprom (MCX:GAZP). None of Ørsted’s direct suppliers for the build-out of renewable energy plants are Russian.

As previously announced, Ørsted intends to donate any 2022 net profits after hedges and tax from the Gazprom Export contract to humanitarian aid in Ukraine.

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