Get 40% Off
👀 👁 🧿 All eyes on Biogen, up +4,56% after posting earnings. Our AI picked it in March 2024.
Which stocks will surge next?
Unlock AI-picked Stocks

Europe strains for clarity as Russia stands by roubles-for-gas demand

Published 04/29/2022, 10:41 AM
Updated 04/29/2022, 10:46 AM
© Reuters. FILE PHOTO: An employee in branded jacket walks past a part of Gazprom's Power Of Siberia gas pipeline at the Atamanskaya compressor station outside the far eastern town of Svobodny, in Amur region, Russia November 29, 2019.  REUTERS/Maxim Shemetov/File P

By Kate Abnett and Francesco Guarascio

BRUSSELS (Reuters) - Companies and countries were at odds over Moscow's rouble-for-gas payment system on Friday, while European officials promised more guidance on whether buying Russian gas can comply with sanctions and Russia said it saw no problem with its plan.

Russia cut gas supplies to Bulgaria and Poland on Wednesday after they refused to abide by the demand issued in a Russian presidential decree last month for gas payments in roubles, prompting concerns other countries could be the next to be hit.

Germany, which imports around half of its gas from Russia, said on Friday energy companies can open special accounts with Gazprombank to pay for Russian gas, without breaching sanctions if transferring euros or dollars to them fulfils their contractual obligations.

It did not specify whether companies could do this and also open a rouble account, as requested by Russia, without being in breach of EU sanctions.

Denmark's Orsted (OTC:DOGEF) said it has no intention of opening a rouble account in Russia, although it declined to comment on payment in other currencies. Italy's ENI (BIT:ENI) also said it had not opened an account in roubles.

Under Russia's mechanism, buyers are obliged to deposit euros or dollars into an account at privately-owned Russian bank Gazprombank, which has then to convert them into roubles, place the proceeds in another account owned by the foreign buyer and transfer the payment in Russian currency to Gazprom (MCX:GAZP).

EU energy ministers will on Monday hold an emergency meeting to discuss their response to Russia's demand.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

The European Commission, the EU executive, has already said countries may be able to make sanctions-compliant payments provided they declare their payments are completed once it has been made in euros and before it is converted into roubles.

EU countries, however, have said they want more clarity, while Germany, the bloc's biggest economy and among the most dependent on Russian gas, says it cannot afford to stop buying Russian supplies, even though it is taking steps to find alternative sources of energy.

A European Commission official told Reuters on Friday the executive will provide EU countries with extra guidance following complaints from some countries that ambiguity would leave different countries reaching different interpretations of what they were allowed to do.

Russia on Friday said it saw no problem with its proposed system.

"If the established procedure for interaction between gas buyers and the authorised bank is observed by the buyer, and there are no problems for the authorised bank in terms of selling currency on the stock exchange due to restrictive measures on the part of foreign states, then there cannot be any obstacles to paying for and receiving natural gas," Russian Central Bank Governor Elvira Nabiullina said.

The rouble has to an extent benefited from Moscow's demand for roubles payment. The currency hit its highest level versus the euro in more than two years on Friday supported by capital controls as the central bank cut interest rates for the second time this month.

European gas prices have hit record levels since the invasion of Ukraine by Russia, Europe's top gas supplier, and were up slightly on Friday.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

HELPFUL 'MESSINESS'

Central to the confusion on the part of the European buyers is whether Russia would only consider the payment to be complete after the gas-to-roubles conversion is done - a transaction that would involve Russia's central bank, which is subject to EU sanctions.

Speaking on condition of anonymity, an EU diplomat admitted a certain amount of ambiguity could be helpful as the bloc seeks to prevent any widening of divisions between countries, which have different levels of reliance on Russia and different deadlines to make payments.

"In the circumstances, a little bit of a messiness might just be preferable," the diplomat said.

Poland and Bulgaria have contracts with Gazprom due to expire at the end of this year, which meant their search for alternative supplies was already advanced. Poland also has very healthy gas stocks around 77% full.

Austria’s OMV,, which has a contract with Gazprom until 2040, said it was analysing how a change could be implemented for it to pay in roubles without breaching sanctions when next payment is due in May.

Germany's advice on Friday echoed that given by the Commission last week, but the Commission also warned complying fully with Russia's scheme could breach the bloc's sanctions.

Germany's leading energy companies Uniper and RWE both declined to comment.

EnBW's VNG unit on Friday said it is staying within the law when it comes to paying for Russian volumes required under current currency requirements, adding it will not unveil details of contracts with its suppliers..

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.