Dutch gov't: Cities that break Gazprom contracts won't face damages claims

Around 120 mostly smaller Dutch cities have contracts with Gazprom's Dutch subsidiary, which is based in the southern city of Den Bosch.

 The logo of Gazprom company is seen on the facade of a business centre in Saint Petersburg, Russia March 31, 2022. (photo credit: REUTERS/REUTERS PHOTOGRAPHER)
The logo of Gazprom company is seen on the facade of a business centre in Saint Petersburg, Russia March 31, 2022.
(photo credit: REUTERS/REUTERS PHOTOGRAPHER)

The Dutch government said on Thursday that cities wishing to unilaterally end gas supply contracts with Gazprom and its subsidiaries would be immune to damages claims under sanctions rules, in a bid to persuade more to cut ties with Russia.

Around 120 mostly smaller Dutch cities have contracts with Gazprom's Dutch subsidiary, which is based in the southern city of Den Bosch.

Following Russia's Feb. 24 invasion of Ukraine, the Netherlands' Union of Cities VNG said cities would not renew their Gazprom contracts, which have varying lengths.

However, the cities have said it would be difficult or impossible to dissolve existing deals.

In a letter to parliament, Climate and Energy Minister Rob Jetten said such contracts are "undesirable" and should be wound down as soon as possible.

"In the fifth EU sanction package, member states have agreed that it is forbidden for tendering (government bodies)... to award contracts to Russian parties in the Russian Federation, including their European subsidiaries," Jetten wrote in answers to questions posed by an MP.

"Existing contracts that were made before the 9th of April must also be ended or wound down by Oct. 10, 2022," he wrote.

Cities that wish to exit their contracts would be protected from "fines, damage claims and compensation" under the sanctions rules, the letter said.

A ministry spokesperson said European countries, including the Netherlands, are still considering exemptions to the rule specifying existing contracts must be wound down.

Dutch cities that break their Gazprom supply contracts but still need gas would be forced to purchase it on the open market or from a larger energy company.

In effect that would still likely mean purchasing a significant amount of gas that originated from Gazprom, only at a higher cost, the spokesperson said.

A spokesperson for the City of Utrecht, the largest of the Dutch municipalities that has a deal with Gazprom's Dutch subsidiary, said it will not extend its contract after Jan. 1, 2024.