Suddenly Gazprom’s gas is uncomfortable

The swimming pools, city hall and sports halls of The Hague: they are all heated with gas from the Russian state company Gazprom. Uncomfortably, after the Russian invasion of Ukraine, many parties find in the city council. “It is unacceptable if we as the City of Peace & Justice make the Russian invasion of Ukraine financially possible so indirectly,” said PvdA councilor Janneke Holman on Thursday. in an appeal to the municipality

Unrest has also arisen in many other Dutch municipalities and at water boards and a number of provinces in recent days about energy contracts with Gazprom. The company, which has close ties to the Kremlin and provides revenue for the Russian treasury, suddenly no longer feels like such a suitable supplier of gas in many places. In Hilversum, Wijchen, Hellendoorn, Krimpenerwaard, Utrecht, Zuidplas and in the province of Friesland, questions were asked by councilors or members of the state.

The tenor of those questions is more or less the same everywhere: shouldn’t the municipality or province simply cancel the contract with Gazprom? “Better yet, the council will stop adding to the Russian treasury today,” says Jan Baas, party leader of the SP in Zuidplas. The party Pro Krimpenerwaard submitted a motion in which it told the council that “municipalities, albeit on a small scale, can also contribute to putting pressure on Putin”.

It forces local authorities to weigh up whether or not they should be stricter than the European sanctions? And what are the consequences of terminating a contract?

The fact that many municipalities do business with Gazprom for the energy supply for municipal facilities was already apparent from research at the beginning of last year by the journalistic website Follow the Money† This concluded that more than 120 municipalities maintain contracts with Gazprom. Especially in Friesland, Limburg, Twente, Gelderland and Utrecht, many municipalities depend on the gas from the Russian supplier.

Gazprom is also an important supplier to Dutch water boards. More than half of the 21 water boards have a contract with the Russian company.

Local authorities have to weigh up: should they or should they not be stricter than the European sanctions?

According to them, the fact that municipalities end up with the Russian company for their energy needs is simply due to the fact that Gazprom comes out on top in tender procedures. The Stentor reported Thursday that Apeldoorn had chosen Gazprom in 2016 because of the low price. And that was also the reason for choosing the Russians in Utrecht. In a letter about the 2020 contract, the college wrote that Gazprom 20 to 45 percent was cheaper than the other two companies participating in the tender.

The agreements with Gazprom have not always been passed without criticism. In several municipalities, the opposition has sometimes been critical before. In Lochem, Gelderland, GroenLinks and D66 were already dissatisfied two years ago, because Gazprom was said to be the least sustainable energy supplier. And that while the region presented itself as a ‘cleantech’ region. There was no majority for a motion from the two parties.

Multi-year contracts

What now? The contracts are generally contracts for several years. Sometimes an end is already in sight, such as in Twente: half of the municipalities there will collectively switch to green biogas by the end of this year. That was not a decision to punish the Russian company, says a spokesperson opposite Tubantia† “The cancellation was already last summer.”

Other municipalities are hesitant: they expect that it will not be easy to terminate a contract early – not to mention that they will most likely pay more in that case. This applies, for example, to the municipality of Nijmegen, where the contract runs until the end of this year, a spokesperson reported to the ANP. The Hague sees no reason to change the agreements: their contract runs until 2023 and the tender has been conducted in accordance with government guidelines.

Yet there are also governments, such as the municipality of Utrecht, that are already investigating what options they have. A spokesperson for the municipality of Apeldoorn also indicated The Stentor know that the contract with Gazprom is being looked at more closely, but that the measures taken by the central government will ultimately be leading.

The water boards are now assessing whether they can bypass the agreements with the Russian supplier. “The situation in Ukraine is reason enough to reconsider the contracts,” a spokeswoman told ANP.

Friesland expects to have “a lot of homework” for the contracts with Gazprom in the coming days, Sietske Poepjes told Omrop Fryslân. The province, the water board and almost all municipalities are customers of the company. The Commissioner sees opportunities to get rid of those agreements. “Often there is a clause in a contract that you can get out of it. There must often be a real threat of war; there is now.”

The deputy herself is in favor of sanctions, she says. “I also know: in Russia they are not really impressed by the Province of Fryslân. But that’s not the point. All those small governments across Europe add up to a major trading partner for Russia.”

But even if it were possible to terminate a contract, there is a chance that a municipality will still burn gas from Gazprom, says energy expert Lucia van Geuns of the The Hague Center for Strategic Studies. According to her, the gas market is fairly opaque: import gas is mixed in various places in the country so that it is suitable for private and small business customers, such as governments. According to her, suppliers also do not know “which flag their gas molecule has”. A municipality can therefore switch to another gas supplier. “But it cannot guarantee that your gas does not originate in Russia.”