Russia and Ukraine: German energy company agrees to Kremlin demands to pay for Russian gas - Start Up Gazzete
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Russia and Ukraine: German energy company agrees to Kremlin 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 ‘s demand that all transactions be carried out in the Russian currency.

Other European energy companies are preparing to do the same amid concerns about supply cuts.

Uniper indicated that it had no other option, although it specified that it was still in compliance with the EU sanctions .

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

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

Germany’s largest energy supplier , RWE, declined to comment on how it will pay for Russian gas.

In late March, the Russian government said ” hostile countries ” 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 abroad. of its territory.

The Yamal-Europe gas pipeline in Poland.
The Yamal-Europe gas pipeline in Poland.

Under the decree, European importers 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 buyers of Russian gas could complete payments in euros and get confirmation of this before the conversion to rubles took place, that would not breach 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, caused confusion when she said that companies could still be breaking the rules.

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

“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 only is completed when it is converted into rubles”.

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

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

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

Poland, one of the staunchest supporters of tougher sanctions against Russia, said the EU should penalize countries that 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 being consequences for these countries [that pay in rubles] and that as a result they stop paying in rubles ,” he 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 EU companies ‘ gas supply contracts 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 it was “the path the EU set for 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 supply cuts could have a huge economic impact.

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

Eni declined to comment while OMV denied 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,” she told the BBC.



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Joshua Smith

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