European companies are beginning to move forward to meet Russian demands and keep the gas flowing.
By Ewa Krukowska and Alberto Nardelli Bloomberg
Posted on May 16, 2022May 16, 2022
The European Union said companies can continue to buy gas without violating sanctions as it softened its stance in a standoff with Moscow over energy supplies.
The European Commission sent its revised guidelines to member states on Friday, a spokesman said on Monday. In the updated recommendations, companies should make a clear statement that they consider their obligations fulfilled as soon as they pay in euros or dollars.
EU sanctions “do not prevent economic operators from opening a bank account with a specific bank for payments due under contracts for the supply of natural gas in gaseous state in the currency specified in those contracts,” the Commission said. “Operators should make a clear statement that they intend to fulfill their obligations under existing contracts and consider their contractual obligations in relation to payment already fulfilled by paying in euros or dollars in accordance with the existing contracts.”
The guidelines will not prevent companies from opening an account with Gazprombank and will allow them to buy gas in accordance with EU sanctions following Russia’s invasion of Ukraine. But it doesn’t address Moscow’s requirement to open a second account in rubles, which a decree by President Vladimir Putin said is required to complete the payment. The forecast is consistent with what Bloomberg reported on Saturday.
European gas prices extended their losses on Monday.
European companies are beginning to move forward to meet Russian demands and keep the gas flowing. Italian energy giant Eni SpA will open accounts in rubles and euros with Gazprombank by Wednesday, according to people familiar with the situation, in order to be able to make payments on time this month and avoid risks to gas supplies.
The company waited for the official release of those guidelines before acting, one of the people said.
German giant Uniper SE and Austria’s OMV AG have also said they anticipate further gas purchases.
Federal Economics Minister Robert Habeck was optimistic on Monday that German energy suppliers will be able to make their next gas payments to Moscow despite the sanctions regime and the new Moscow rules.
“Companies will pay their next bills in euros,” Habeck told reporters during a tour of the Leuna refinery in eastern Germany. EU sanctions would still allow Russian banks to transfer this money internally to “so-called K-accounts,” he added, leaving open whether the accounts would be in euros or rubles. “In my view, this is in line with the sanctions, also according to the EU Commission,” he said.
Polish Prime Minister Mateusz Morawiecki has criticized the EU for softening its stance on ruble payments.
“I am disappointed to see that there is agreement in the European Union to pay for gas in rubles,” he said on Sunday. “Poland will play by the rules and will not give in to Putin’s blackmail.” Russia stopped gas supplies to neighboring Poland at the end of April.
In full, the EU guidelines state:
“Council Regulation (EU) 833/2014 and Council Regulation (EU) 269/2014 do not prevent economic operators from opening a bank account with a specific bank for payments made under contracts for the supply of natural gas in gaseous form condition shall be due in the currency specified in these Contracts for the fulfillment of payments under these Contracts, provided that payments in such currency are made under normal business conditions, it being understood that such payments in such currency definitively discharge economic operators from their payment obligations these contracts without taking any further action on your part in relation to payment. To this end, these operators should make a clear statement that they intend to fulfill their obligations under existing contracts and consider their contractual obligations in relation to the already fulfilled payment by paying in euros or dollars in accordance with the existing contracts.”
(Updates with Habeck quotes from paragraph 9)
–With the support of Alberto Brambilla, Chiara Albanese and Arne Delfs.