European energy companies seek ways to comply with Putin’s gas payment decree | Gas

Energy companies in Europe are considering opening Russian accounts to pay for Gazprom’s gas after Vladimir Putin’s regime cut off supplies to Poland and Bulgaria and insisted other countries pay in roubles.

Major gas distributors in Germany and Austria have confirmed they are looking for ways to continue making payments after Putin signed a decree in late March calling for a “special procedure for foreign buyers to meet their obligations to Russian natural gas suppliers”.

The decree stipulates that non-Russian gas buyers must open special type “K” accounts in rubles and foreign currencies with Gazprombank, Russia’s third-largest bank. Gazprombank was set up to be a service provider to Gazprom, the state-owned gas producer that has a monopoly on exports through pipelines to Europe.

German retailer Uniper and Austrian OMV have confirmed that they are considering how to comply with the decree. The Financial Times has reported that Hungarian and Slovak companies, as well as Italy’s Eni, are also considering signing up for the accounts in hopes of securing continuity of supplies, although the European Commission has said this could breach penalties.

Poland and Bulgaria took a defiant stance, refusing to subscribe to Putin’s preferred arrangement. Polish Prime Minister Mateusz Morawiecki described Russia’s retaliatory gas cutoff as a “direct attack”.

However, Germany, Europe’s biggest economy and biggest user of Russian gas, struck a more soothing tone amid fears – disputed by some analysts – that an embargo would be impossible without crushing its economy.

A spokesperson for Uniper, a major German buyer of Russian gas, confirmed on Thursday that it was in talks with Gazprom “in close coordination with the German government” on “concrete payment terms”, but that he would continue to pay in euros for now.

“Uniper can say for its contracts: we consider a payment conversion in line with the sanctions law and the Russian decree to be possible,” the spokesperson said. “For our company and for Germany as a whole, it is not possible to do without Russian gas in the short term; this would have dramatic consequences for our economy.

OMV, an Austrian oil and gas company, is also looking for ways to pay for gas without breaching EU sanctions. In a statement, OMV said: “We have analyzed Gazprom’s request for payment methods in light of EU sanctions and are currently working on a sanctions-compliant solution.”

European Commission President Ursula von der Leyen said on Wednesday that the Kremlin was using “fossil fuels to try to blackmail us”, and that the EU was seeking to reduce its dependence on Russian gas by importing more from the United States. United. However, the EU has not attempted to impose sanctions on Gazprom or Gazprombank.

Bloomberg News reported on Wednesday that four European companies paid in rubles, citing a person close to Gazprom, while 10 others opened accounts.

Under the arrangement demanded by Russia, the gas would be paid for in euros – the currency in which the contracts were drawn up – and these euros would be sold on the Moscow stock exchange for rubles, which would then be transferred to Gazprom.

The additional demand for rubles would help support the currency, helping importers into the Russian economy, which has been hit hard by war and economic isolation caused by sanctions imposed by many other major countries.

Eni was approached for comment.

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Elaine R. Knight