EU energy groups prepare to meet Vladimir Putin’s conditions for Russian gas


Some of Europe’s biggest energy companies are moving to comply with a new payment system for Russian gas sought by the Kremlin, which critics say will undermine EU sanctions, threaten the bloc’s unity and provide billions of dollars in cash critical to the Russian economy.

Gas distributors in Germany, Austria, Hungary and Slovakia – including two of Russia’s biggest gas importers, Dusseldorf-based Uniper and Vienna-based OMV – are preparing to open ruble accounts at Gazprombank in Switzerland, according to people familiar with the preparations.

Negotiations between the utilities and Gazprom, the Russian state-controlled gas supplier, have intensified as payment deadlines approach, they said.

Italy’s Eni, another big Gazprom customer, is weighing its options, two people familiar with the talks said. The Rome-backed company has until the end of May, when its next payment for Russian supplies is due, to make a final call, Italian officials said.

The preparations show the impact of Russian efforts to militarize gas supplies and challenge the EU’s ability to maintain a united front against Moscow.

Russian President Vladimir Putin issued a decree in late March that gas buyers from supposedly hostile countries – which include the whole of the EU – must open foreign currency and ruble bank accounts with Gazprombank, the financial arm of Gazprom based in Switzerland. , to pay for their supplies. The move was seen as a way to neutralize EU sanctions against Russia’s central bank following Moscow’s invasion of Ukraine.

Polish and Bulgarian gas importers, who adamantly refused to sign up to the Kremlin regime, saw their gas supplies from Russia cut off on Wednesday, a move European Commission President Ursula von der Leyen called blackmail .

Brussels struggles to counter Moscow’s demands: Commission issues official technical guidelines admitting that the financial engineering put in place by the Kremlin could be “sanctions compliant” under certain conditions. But it would give Russia access to billions in gas revenue to support its currency and economy, member states and EU officials said.

Under the new Russian mechanism, European utilities would continue to pay Gazprombank for their imports in euros, ensuring that they do not violate the sanctions regime. The Russian bank, which is not under EU sanctions, would then, at its request, convert the euro-denominated deposits into rubles in a second account opened in its name, for subsequent payment to Russia.

The commission’s advisers concluded that any EU move to impose sanctions on Gazprombank – which would be the quickest way to close the loophole – could jeopardize the entire existing payment mechanism for the Russian gas, resulting in a catastrophic halt to shipments to the bloc.

Valdis Dombrovskis, executive vice president of the commission, said in an interview that it was mainly up to the individual companies that signed the contracts with Gazprom to implement and interpret them. But he urged them to stick to the letter of those contracts.

“Prices are agreed in euros or dollars. So you pay that amount of euros for a given amount of gas, end of story,” he said.

The Russian maneuver against Bulgaria and Poland was nevertheless a challenge, he admitted: “It is important to preserve the unity of the EU in this regard and as President von der Leyen said, we should not give in to this kind of blackmail.

OMV said it had analyzed Gazprom’s request on payment methods in light of EU sanctions and was working on a sanctions-compliant solution.

Tiina Tuomela, Uniper’s Chief Financial Officer, said: “We consider the change to the payment process to be in line with the Sanctions Act and therefore payments are possible.”

Italian officials said the commission’s guidance on whether Gazprom’s payment system represented a sanctions breach was ambiguous and failed to provide clarity to member states.

German Vice-Chancellor and Economics Minister Robert Habeck said on Wednesday that the Russian payment mechanism was “the way the EU has given us”.

“This is the path that is compatible with the sanctions, and as far as I know, German companies that proceed in this way are honoring their contracts,” he said. “Most EU countries take this approach.”

He added that following a visit to Poland on Tuesday, he understood that Warsaw intended to take a tougher line with Moscow. “They are not afraid of an embargo,” he said.

Additional reporting by Amy Kazmin in Rome, Neil Hume in London, Joe Miller in Frankfurt and Sam Fleming in Brussels


Comments are closed.