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German energy company Uniper has caved in to Russia’s demands and will use the ruble conversion plan outlined by Moscow, despite fears it could undermine sanctions.
Moscow threatened to cut off Europe’s gas supplies if companies didn’t make payments in rubles. The Kremlin worked with Russian gas company Gazprombank to set up a system that would allow companies to deposit foreign currency into an account, while Gazprom would settle transactions in rubles.
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Uniper said on Thursday it had no choice but to use the system, and a spokesman told the BBC it was confident the transaction would still comply with EU sanctions.
“For our company and for Germany as a whole, it is not possible to do without Russian gas in the short term, which would have dramatic consequences for our economy,” said the spokesman.
Other European energy companies are reportedly planning to follow suit and use the Russian system.
The European Commission warned companies last week that Moscow’s plan must not violate sanctions, stressing that compliance would likely be necessary to meet contractual obligations.
The commission originally said the program could violate sanctions, but said this week the proposal does not necessarily violate the sanctions, Reuters reported.
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“It would be advisable to obtain confirmation from the Russian side that this procedure is possible under the rules of the decree,” reads a document from the Commission, noting that companies should make clear statements that they have contractual obligations as satisfied if they make their deposits in the originally agreed currency, almost exclusively in dollars or euros.
Brussels also said there are options that could allow companies to continue to legally pay for gas, but the procedure for securing exemptions is not yet clear.
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Gazprom said on Wednesday that it cut off gas to the two EU countries in retaliation for unpaid energy bills for the month of April when they refused to comply with Moscow’s demands to pay in Russian currency.
“Gazprom’s announcement that it would unilaterally stop gas supplies to customers in Europe is another attempt by Russia to use gas as a blackmail tool,” EU President Ursula von der Leyen said in a statement.
“This is unjustified and unacceptable. And it shows once again the unreliability of Russia as a gas supplier,” she added.
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Von der Leyen said EU nations were “prepared for this scenario” and have remained in close contact to find other ways to supply Poland and Bulgaria with their energy needs.
Fox News’ Caitlin McFall contributed to this report.