Europe can’t make up its mind on how to pay for Russia natural gas imports that continue to fuel homes, businesses and power stations.
The confusion centers on the logistics of the payments themselves. Several European gas buyers have been preparing to work around the Kremlin’s demand that gas bills be paid in rubles, rather than the euros or dollars stipulated in contracts.
According to Russia’s new payment mechanism, buyers in “unfriendly” countries must open two accounts at Gazprombank — one in euros and the second in rubles, from which payments for the gas would be made.
But on Tuesday, the European Commission said companies opening an account in Russia’s Gazprombank to allow their payments to be converted into rubles would fall foul of EU sanctions.
That statement appeared to contradict guidance the Commission gave just four days earlier, which led some of Europe’s biggest energy companies to assume they could get around the currency issue by opening two accounts with the Russian bank.
It comes as several large European companies are attempting to pay their bills on time without violating sanctions.
“Anything that goes beyond opening an account in the currency of the contract with Gazprombank and making a payment to that account, and then issuing a statement saying that… you have finalized the payment, contravenes the sanctions,” Eric Mamer, the Commission’s chief spokesperson, said at a press briefing.
Russian state energy giant Gazprom cut off gas supplies to two EU countries — Poland and Bulgaria — in late April, making good on a decree by President Vladimir Putin in March which threatened to suspend deliveries to “unfriendly” nations that did not pay for their gas in rubles. EU leaders described Moscow’s move as “blackmail.”
Since then, European gas distributors, national governments and EU officials have been scrambling to avoid a wider interruption in supplies, while upholding sanctions imposed on Moscow over the invasion of Ukraine.
Last month, the European Commission said it “appear[ed] possible” for the new payment mechanism to work. On Friday, it said that so long as buyers pay in euros and dollars, and make a “clear statement” that they have done so, they will not breach EU sanctions.
“[Buyer’s should] consider their contractual obligations regarding the payment already fulfilled by paying in euros or dollars,” the commission said in a guidance note to EU member states, and shared with CNN Business.
Europe’s companies try to pay
Friday’s guidance has spurred some of Europe’s big energy companies to put new arrangements in place, with payment deadlines looming this month.
Italy’s ENI said Tuesday that it had started the process of opening two accounts with Gazprombank, one in euros and another in rubles. It said that, once it makes its deposits in euros, an agent at the Moscow Stock Exchange would convert the funds into rubles within 48 hours.
The company said in a press release that the new process was “not incompatible with existing sanctions” and would not, at the moment, face any European regulation to try to stop it.
German energy company RWE (RWEOY) told CNN Business on Tuesday that it had opened a new bank account to pay for its Russian gas imports, but did not say with which bank.
“We are prepared for payment in euros and have opened a corresponding account,” a company spokesperson said. “We are therefore acting in accordance with European and German regulation.”
France’s Engie (ENGIY) also said Tuesday that it had found a compromise with Gazprom. Russian gas accounts for about 20% of the company’s global gas consumption.
“We have today line of sight for a solution that will allow us to pay using the currency for the contract, which seems to be acceptable for Gazprom and which is in compliance with the EU sanctions at least to our understanding,” CEO Catherine MacGregor told reporters on a call.
MacGregor said Engie’s next gas payments were imminent, but did not say whether it had opened, or intended to open, an account with Gazprombank.
German gas distributor Uniper said last month it would continue to pay for its Russian supplies in euros but added that it believed a “payment conversion compliant with sanctions law” was possible.
Not everyone agrees, however.
Finland’s state-owned gas company Gasum said on Tuesday that it “does not accept” Gazprom’s payment terms, and was preparing for its gas deliveries from Russia to be cut off.
Europe has proposed to slash its consumption of Russia’s gas by 66% by the end of this year. It is expected to publish a more detailed plan later this month.
— Robert North contributed reporting.