Danish power company Oersted signals frustration over long-term Gazprom contract

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Danish power company Oersted A/S has said it will not be able to end its ties with Russian giant Gazprom PJSC until 2030, pointing to the difficulties Europe is facing in exiting its market from the EU. energy of Moscow’s influence.

Oersted said in a statement to investors that it had a take-out contract with Gazprom dating back to 2006. The contract expires in 2030 and cannot be terminated at this time, the power company said.

Oersted has signaled that it would cut Russian natural gas imports sooner if authorities impose sanctions on those flows, giving the company a legal outlet. It’s a move the company said it supports and would immediately respect.

Under the contract, Oersted imports about 20 terawatt hours of gas per year. The company, which has turned to renewables in recent years, said it would take the minimum annual volume of gas allowed under the contract.

The statement from a major utility offers a rare insight into the terms on which European companies buy gas from Gazprom. Europe sources around 40% of the gas it consumes for electricity, heating and industrial uses from Russia, where Gazprom has a monopoly on gas pipeline exports.

Officials and traders in the region fear Russia may turn off the taps in response to sanctions the West imposed on Moscow after its invasion of Ukraine. Halting exports would incur costs for the Russian government, which owns the majority of Gazprom shares and receives much-needed revenue from the company’s exports. Still, fears the Kremlin could limit supplies pushed natural gas futures in northwestern Europe to record highs on Monday, threatening to fuel consumer and business bills.

Oersted said he was looking to reduce the financial hedges he had put in place to lock in profits from Gazprom’s exports in case supplies were cut off or sanctioned.

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