EU drafts plan for buying Russian gas without breaking sanctions - Bloomberg

In new guidance on gas payments, the European Commission plans to say that companies must make a clear statement that they consider their obligations fulfilled once they pay in euros or dollars, according to existing contracts, according to people familiar with the matter. . The EU’s executive arm has told governments the guidance does not prevent companies from opening an account with Gazprombank and will allow them to buy gas in line with EU sanctions following Russia’s invasion of Ukraine, the people added.

 

European companies have been scrambling for weeks to figure out how they can meet Moscow’s demand and keep crucial gas flowing without violating sanctions on Russia’s central bank. Putin said on March 31 that if payments are not made in rubles , gas exports would stop. . Europe relies heavily on Russian fuel to heat homes and power industry.

 

Initially, the EU had assessed that the payment mechanism demanded by Putin handed Moscow full control of the process, breached contracts and, more importantly, violated bloc sanctions.

 

On Friday, the commission told member states at a closed-door meeting that the updated guidance will clarify that companies can open a euro or dollar account with Gazprombank as ordered by the Kremlin, according to the people, who asked not to be identified. because the meeting was private.

 

But the EU’s executive arm stopped short of saying whether also having a ruble account, a step included in the Russian decree, was in line with EU regulations. Officials had previously indicated, though never in writing, that opening such an account would violate sanctions. The updated guidance, as presented to member states, does not address this specific point, the people said.

 

Another key point in the guidance is that once European companies make a payment in euros or dollars and declare that their obligation is complete, they should not be required to take any further action by Russia with respect to the payment.

 

Time is running out because many companies have payment deadlines that expire at the end of this month, and if they don’t pay, gas flows could be cut off. Poland and Bulgaria have already had their supplies cut off after failing to comply with Russian requests.

 

Putin’s demands to pay in rubles have divided EU member states, highlighting some nations’ dependence on Russian imports. Italian Prime Minister Mario Draghi said earlier this week that European companies will be able to pay for gas in rubles without breaking sanctions.

 

At Friday’s meeting, government representatives were also divided, according to one of the people. While Germany, Hungary, Italy and France broadly backed the commission’s plan, Poland said it did not provide legal clarity and called for EU ambassadors to discuss the matter. Others were confused by the lack of specific guidance on opening ruble accounts.

 

Germany told the meeting that it consulted its companies on the proposal and got positive feedback, the person added. He also sought to refine the recommendations by clarifying that EU sanctions do not prohibit opening multiple accounts at Gazprombank.

 

Individual member states are ultimately responsible for enforcing EU sanctions, but the commission provides legal guidance.

 

Putin’s decree required companies to open two accounts with Gazprombank, one in euros and one in rubles, and stipulated that gasoline payments would not be settled until the euros were converted into rubles.

 

Russia clarified its decree earlier this month, stating that payments received in foreign currency would be exchanged into rubles through accounts at Russia’s National Clearing Center, and Gazprom provided buyers with additional guarantees that the central bank would not be involved in the conversion process.