The Government of Denmark is reportedly “keeping all options open” on possible intervention into the terms of a gas supply contract between Danish energy giant Ørsted and Russia’s Gazprom. Following a weekend in which European energy, financial and government entities imposed sanctions en masse on enterprises tied to Russian President Vladimir Putin after last week’s invasion of neighboring Ukraine, Denmark’s Ørsted–the country’s largest energy company–was put in the unenviable position of having to explain its contractual ties to Gazprom, which is Russia’s largest company by market capitalization and is majority-owned by the Russian State.
Following a press conference earlier this month in connection with the release of its 2021 annual report, Danish daily newspaper Berlingske Tidende quoted Ørsted chief executive Mads Nipper as confirming (and seemingly re-affirming, weeks before the invasion) his company’s supply contract with Gazprom.
“We have a contract that runs until around 2030,” Nipper said, per Berlingske Tidende’s reporting. “It is our intention to honor it. We will do so, as has Gazprom.”
Berlingske’s request for a follow-up interview with Mads Nipper last Friday was declined, but the company stated in an email to the newspaper that it has a mutually binding gas purchase agreement with Gazprom that was entered in 2016 and remains in effect for 20 years from 2011, expiring at the end of 2030.
While Ørsted would not confirm the price or quantity terms of the agreement for reasons of corporate confidentiality, information from Gazprom, reported in both Berlingske Tidende and national news agency Ritzau, Gazprom supplied 1.75 billion cubic meters of gas to Ørsted under the terms of the contract in 2016, an amount roughly equivalent to 70 percent of Denmark’s total gas consumption for that reference year. Per Ritzau, Ørsted reportedly sells much of this gas to other countries.
Berlingske later approached Danish Finance Minister Nicolai Wammen, who is charged with handling (among other things) the Danish state’s ownership stake in Ørsted, for the government’s position on a state-owned firm doing business with Gazprom. His answer was largely noncommittal.
“The Danish Government condemns Russia’s attack on Ukraine. Ørsted’s executive board and management are jointly responsible for all company affairs, including its day-to-day operations, while the State, which owns 50.1 percent of the company, operates from an ‘arm’s length’ principle under terms of its ownership policy. Against that background, the State is not involved in daily operations, including the signing and subsequent handling of legally binding contracts,” Wammen wrote to Berlingske Tidende.
But as calls across the political spectrum in Denmark grow in favor of cutting ties to Russia, the Danish Government may finally be weighing options for intervention: this according to Danish Minister of Energy and Climate, Dan Jørgensen, who spoke to Ritzau on his way to a Monday meeting of EU energy ministers in Brussels.
“We are in the process of analyzing what can be done, and this must, of course, be considered along with the general sanctions being imposed at the European level,” Jørgensen said.
In an official release from the company on Sunday, Ørsted stated the following: “Ørsted finds the situation deeply troubling, not least the human suffering, caused by the war in Russia. Russia’s aggression goes against everything Ørsted stands for, which is why we have taken significant steps in alignment with our corporate values. Regarding the gas that Gazprom supplies to Denmark, Ørsted recommends a clear and coordinated effort from the EU and Great Britain. Unlike other types of products, gas shortages bring serious human and economic consequences, which is why there is a need for coordination at the EU level, rather than leaving this to the individual company. Dependency on Russian gas and possible bans on gas imports from Russia must be determined and enforced with the help of clear political sanctions.”
Ørsted’s management confirmed that the company has stopped all purchases of biomass and coal from Russia, will not enter any new contracts with Russian companies, will ensure that no Russian companies are among the direct suppliers for Ørsted’s ongoing renewable energy buildout, and committed to a donation to UNICEF and other local refugee support groups based in Poland.
But while Ørsted has hesitated amid a largely coordinated campaign to cut financial ties with Russia, other Nordic entities with exposure to the Russian energy and logistics sectors have had fewer qualms. On Monday morning, shipping giant Mærsk–which currently handles about 20 percent of all seabound trade–told Berlingske Tidende via email that it was considering halting all freight bookings to and from Russia.
“We at A.P. Møller-Mærsk are closely monitoring the situation and preparing to abide by sanctions and restrictions imposed on Russia, as well as protecting our operations and employees in a rapidly changing situation. One such preparation includes possible suspension of Mærsk bookings to and from Russia by land and by sea,” the company wrote to the Danish newspaper.
Additionally, other Nordic energy names are bowing out of Russia rapidly and publicly. Equinor, the Norwegian energy giant that is two-thirds owned by the Norwegian State, announced on Monday that it is halting all new investments in Russia, and “starting the process of withdrawing” from existing joint ventures in Russia. Equinor has been active in Russia for more than 30 years, and has had an ongoing joint venture with Rosneft since 2012.
“We are deeply troubled by the invasion of Ukraine,” Equinor chief executive Anders Opedal stated in Monday’s press release. “It represents a terrible setback for the world, and our thoughts go to all who are suffering as a result of the military attack.”
