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23rd Feb 2024

EU states must ensure firms pay euros for Russian gas

  • All member states have agreed not to pay for Russian gas in roubles, EU senior officials said (Photo: Yuri Samoilov)
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EU member states must guarantee that corporate gas buyers pay for Russian gas in euros in order to respect sanctions against Moscow, EU officials affirmed on Thursday (28 April).

The warning comes after several major European energy companies said they were considering opening Russian accounts to pay for gas in roubles.

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This follows Russian energy giant Gazprom's decision to halt gas supplies to Bulgaria and Poland — which has triggered uncertainty and confusion over gas payments among companies and EU member states.

In response to EU sanctions, Russian president Vladimir Putin signed a decree that would oblige foreign gas-buyers to comply with a two-tiered payment system from 1 April.

This new procedure obliges buyers to first make payments in euros or dollars into a Gazprombank account that will be later transferred into a second bank account in Russia and converted into roubles.

The European Commission previously said that 97-percent of gas contracts explicitly stipulate payment in euros or dollars — and thus the Russian decree constitutes a breach of the contracts.

EU officials said that if companies pay in euros to Gazprombank, they are not in breach of the sanctions. This would only occur if a company accepts to open the second account in rubles.

"What we cannot accept is that companies are obliged to open a second account in roubles and that the payment is complete only when payment is converted into roubles," a senior EU official told reporters in Brussels.

This would give the Russian state and the Russian Central Bank control over the payments before the conversion in the second account is done — what could be considered some sort of loan by the European companies to the Russian Central Bank, the official explained.

"This is absolutely a clear circumvention of the sanctions," the source said.

In February, the EU imposed a ban on any kind of financial transactions with the Central Bank of Russia.

Russia halted gas flows to Poland and Bulgaria on Wednesday because they refused to pay roubles. EU officials said that both countries were using existing mechanisms and had a payment due this week.

"According to our information, both have stuck to the original form of payment," the official said.

All member states, the source said, have agreed not to pay for Russian gas in roubles and the deadline for the next payments was expected to be 20 May.

The EU Commission said they are not aware of the number of European companies that have opened accounts for gas payments with Gazprombank in roubles, after Bloomberg on Wednesday reported that four European companies have already paid in roubles.

The EU has so far imposed a total of five packages of sanctions on Russia over its February invasion of Ukraine. But restrictive measures still spare oil and gas — Moscow's two main sources of income internationally.

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