European companies began moving forward to comply with Russian demands and keep gas flowing.
The European Union has said companies can continue to buy gas without violating sanctions, as it softened its stance in a standoff with Moscow over energy supplies.
A European Commission spokesperson said on Monday that the European Commission sent its revised guidelines to member states on Friday. In the updated recommendations, it said companies should make a clear statement that they consider their obligations to be met once they are paid in euros or dollars.
The Commission said the EU sanctions “do not prevent economic operators from opening a bank account in a bank designated for payments due under contracts for the supply of natural gas in a gaseous state, in the currency specified in those contracts.” “Operators must make a clear statement that they intend to fulfill their obligations under existing contracts and consider their contractual obligations with respect to payment already fulfilled by means of payment in euros or dollars, in line with existing contracts.”
The directive does not prevent companies from opening an account with Gazprombank and will allow them to buy gas in accordance with EU sanctions in the wake of the Russian invasion of Ukraine. But she did not meet the demand of Moscow to open a second account in rubles, which is necessary according to a decree of President Vladimir Putin to complete the payment. The guidance matches what Bloomberg reported on Saturday.
European gas prices extended losses on Monday.
European companies began moving forward to comply with Russian demands and keep gas flowing. Italian energy giant Eni SpA will move to open accounts in rubles and euros with Gazprombank by Wednesday so it can make payments on time this month and avoid any risks to gas supplies, according to people familiar with the situation.
One person said the company was waiting for these guidelines to be officially released before acting.
German giant Uniper SE and Austrian OMV AG also said they expect gas purchases to continue.
German Economy Minister Robert Habeck expressed optimism on Monday that German utility companies would be able to make upcoming gas payments to Moscow, despite the sanctions regime and new Moscow rules.
“The companies will pay their next bills in euros,” Habeck told reporters during a tour of the Leona refinery in eastern Germany. He added that EU sanctions would still allow Russian banks to transfer this money internally to “so-called K accounts”, leaving the field open whether they are euro or ruble accounts. “This, in my opinion, corresponds to the sanctions, as well as according to the European Union Commission,” he said.
Polish Prime Minister Mateusz Morawiecki has criticized the European Union for softening its stance on ruble payments.
“I am disappointed to see that in the European Union there is agreement to pay for gas in rubles,” he said on Sunday. “Poland will stick to the rules and not be blackmailed by Putin.” Russia halted gas flows to neighboring Poland in late April.
The full EU guidelines state that:
“Council Regulation (EU) 833/2014 and Council Regulation (EU) 269/2014 do not prevent economic operators from opening a bank account in a designated bank for payments due under contracts for the supply of natural gas in a gaseous state, the currency specified in those contracts for the fulfillment of payments under them, Provided that the payments are made in that currency, under normal commercial conditions, it being understood that such payments in that currency irrevocably release the economic operator from payment obligations under such contracts, without any further action on their part in connection with the payment.For this purpose, such operators should provide A clear statement that they intend to fulfill their obligations under existing contracts and to consider their contractual obligations with respect to payment already fulfilled by means of payment in euros or dollars, consistent with existing contracts.”
(Updates with Habeck quotes beginning in ninth paragraph)
Assisted by Alberto Brambilla, Chiara Albanese and Arne Delphs.