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Orsted defies Russia, refuses to open roubles account for gas payments

Denmark’s Orsted has no intention of opening a rouble account in Russia to accommodate Moscow’s demand for gas payments in the Russian currency, the energy firm’s CEO said on Friday.

Orsted sold its oil and gas assets in 2017 to focus on offshore wind energy but retains a long-term gas deal with Russia’s Gazprom which runs until 2030.

“We do not want to accommodate the demands of Russia, Putin and Gazprom to pay in roubles … We have no intention of opening a rouble account in Russia,” CEO Mads Nipper said on a media call after Orsted published first-quarter earnings which beat expectations.

Orsted’s contract accounts for the vast majority of Denmark’s gas consumption and roughly 1.5 percent of total Russian supplies to Europe, which last year totalled around 155 billion cubic metres (bcm).

The European Commission on Thursday warned buyers of Russian gas they could breach sanctions if they converted gas payments into roubles, as officials struggled to clarify the EU’s stance on Moscow’s payments demand, which has sown confusion in the bloc.

A day earlier Russia cut off supply to Poland and Bulgaria after they refused to pay in roubles.

Hungary, in contrast, is among those buyers who have said they will transfer funds in euros to Russia’s Gazprombank to be converted into roubles.

Soaring prices boost profits

The world’s largest developer of offshore wind farms, Orsted on Friday reported an almost doubling in first-quarter operating profit buoyed by high power prices.

Earnings before interest, tax, depreciation and amortisation (EBITDA), including new partnerships, rose to 9.4 billion Danish crowns ($1.35 billion) and topped the 8.2 billion expected by analysts in a poll compiled by the company.

The firm still expects 2022 EBITDA excluding new partnerships of 19 billion to 21 billion crowns.

While profits from its core wind business are locked in through subsidy contracts and long-term power purchase agreements, its business unit that operates combined heating and power plants saw core earnings jump 170 percent in the first quarter.

European energy prices have hit historic highs as war in Ukraine and fears of gas supply disruptions in Europe tightened markets already struggling with the effects of coronavirus.

Orsted is 50.1 percent owned by the Danish state.