A large German energy company accepts the Kremlin’s demands to pay for Russian gas

One of Germany’s largest energy companies has reported that it is preparing to buy Russian gas through a payment system that could undermine European Union sanctions over the invasion of Ukraine.

Uniper assures that it will pay in euros, which will then be converted into rubles, satisfying the Kremlin lawsuit that all transactions are carried out in the Russian currency.

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Other European energy companies are preparing to do the same amid concerns about power outages.

Uniper indicated that it had no other option, although it specified that it still complied with the sanctions from the EU.

“We believe that a payment conversion is possible that meets the sanctions law and the Russian decree,” a spokesman told the BBC.

“For our company and for Germany as a whole, it is not possible to do without the gas in Russian short term. This would have dramatic consequences for our economy,” he added.

The largest supplier of Energy Germany’s RWE declined to comment on how it will pay for Russian gas.

In late March, the Russian government said that the “hostile countries“They would have to start paying for their oil and gas in rubles to prop up their currency, after Western allies froze billions of dollars Russia held in foreign currency outside its territory.

The Yamal-Europe gas pipeline in Poland. (GETTY IMAGES)

According to the decree, European importers they must pay euros or dollars into an account at Gazprombank, the Swiss-based trading arm of Gazprom, and then convert them into rubles at a second account in Russia.

The European Commission said last week that if Russian gas buyers could complete payments in euros and get confirmation of this before the conversion to rubles took place, that would not violate the sanctions.

However, there are different views across countries on how to interpret the initial guidance. This week, the president of the European Commission, Ursula von der Leyen, generated confusion when he said companies could still be breaking the rules.

On Thursday, an EU official confirmed that any attempt to convert cash in rubles inside Russia would be a “clear mockery of sanctions”, as the transaction would involve the Central Bank of Russia.

“What we cannot accept is that companies are obliged to open a second account and that between the first and the second account, the amount in euros is in the hands of the Russian authorities and the Central Bank of Russia, and that the payment is completed only when it is converted into rubles.”

The president of the European Commission, Ursula von der Leyen, questioned the companies that seek to pay for Russian gas. (GETTY IMAGES)

On Tuesday, Poland and Bulgaria refused to pay for gas in rubles, prompting Russia’s state-owned gas company Gazprom to shut down the supply.

Both countries had already planned not to renew their contracts with Gazprom when they expire at the end of 2022.

Poland, one of the strongest advocates of tougher sanctions against Russia, said that the EU should penalize countries who used rubles to pay for Russian gas.

Climate Minister Anna Moskwa noted that Germany, Hungary and Austria are resisting the gas embargo.

“We are counting on there to be consequences for these countries. [que pagan en rublos] and that, as a result, stop paying in rubles“, said.

Russia’s move, which has not given countries the same deadline to start paying in rubles, is seen as an attempt to divide Western allies over Ukraine.

97% of the contracts of gas supply of EU companies with Gazprom stipulate payment in euros or dollars.

Hungary and Slovakia have said they will use Russia’s conversion payment method, while German Economy Minister Robert Habeck said on Wednesday that it was “the path that the EU marked us”.

“It is the path that is compatible with the sanctions and, as I understand it, the German companies that are doing it this way are fulfilling their contracts,” he said. “Most EU countries are taking this approach.”

Europe gets about 40% of the natural gas it consumes from Russia, but that percentage is much higher in some countries and sudden cuts in supply could have a huge economic impact.

According to the Financial Times, the Austrian energy giant OMV also plans to adopt the mechanismwhile Italy’s Eni is considering the move.

Eni refused to comment while OMV denied that it was opening a swiss account with Gazprom. “We have analyzed Gazprom’s request for payment methods in light of the EU sanctions and are now working on a sanctions-compliant solution,” he told the BBC.

Source: Elcomercio