EU opens loophole for Russian gas-for-rubles scheme
The European Union said that companies could keep buying Russian gas through Gazprombank without breaching sanctions for Russia’s military invasion of Ukraine, with the condition that they consider their obligations fulfilled once they pay in euros or US dollars, Bloomberg reports citing new guidelines of the European Commission.
The latest EC guidelines do not prevent European gas buyers from opening accounts in Russian Gazprombank as demanded by the gas-for-rubles scheme imposed by Russia's President Vladimir Putin. The EC has softened its previous position that warned that gas-for-rubles scheme would violate sanctions.
As covered in detail by bne IntelliNews, aiming to blow a hole in sanctions on the Russian financial system, on March 23 Putin told Russia’s customers in “unfriendly” countries that they could only pay for their gas imports using the Russian national currency.
Putin’s decree, which caused much confusion, stipulates that European gas buyers open two accounts, one in a foreign currency and one in rubles, with Gazprom-affiliated Gazprombank responsible for converting the foreign currency into rubles and transferring the ruble payment to Gazprom.
However, the buyers “should make a clear statement that they intend to fulfil their obligations under existing contracts and consider their contractual obligations regarding the payment already fulfilled by paying in euros or dollars, in line with the existing contracts.”
The EC stops short of addressing the requirement by the Kremlin to open a second account in rubles, which according to Putin’s decree is the necessary condition of the completion of the payment, according to Bloomberg.
Unnamed sources told Bloomberg that Italian energy giant Eni will move to open accounts in rubles and euros with Gazprombank by May 18 so that it can make payments on time this month and avoid any risks to gas supplies. The company has been said to have been waiting for a formal EC statement before acting.
Last week Bloomberg said that a total of twenty European companies have opened special accounts with Russian Gazprombank, with another 14 buyers requesting paperwork to do so, Bloomberg reported citing unnamed sources.
“The companies will pay their next bills in euros,” German Economy Minister Robert Habeck Habeck told the press, as cited by Bloomberg. EU sanctions would still allow Russian banks to transfer this money internally to “so-called K accounts,” he added. “That is, in my view, in conformity with the sanctions, also according to the EU Commission,” he argued.
In the meantime, Polish Prime Minister Mateusz Morawiecki said he was “disappointed to see that in the European Union there is consent to pay for gas in rubles,” as cited by Bloomberg. “Poland will stick to the rules and will not yield to Putin’s blackmail.”
After Poland and Bulgaria rejected the gas-for-rubles scheme Russian natural gas giant and pipeline exports monopolist Gazprom halted gas flows to the countries in late April.
The full EC guidelines read as follows:
“Council Regulation (EU) 833/2014 and Council Regulation (EU) 269/2014 do not prevent economic operators from opening a bank account in a designated bank for payments due under contracts for the supply of natural gas in a gaseous state, in the currency specified in those contracts for the fulfilment of payments pursuant thereto, provided that payments are made in that currency, under normal commercial conditions, it being understood that such payments in that currency discharge definitively the economic operator from the payment obligations under those contracts, without any further action from their side as regards the payment. For that purpose, those operators should make a clear statement that they intend to fulfil their obligations under existing contracts and consider their contractual obligations regarding the payment already fulfilled by paying in euros or dollars, in line with the existing contracts.”