Gas suppliers in Germany ‘are preparing to pay Putin in roubles’
GAS companies in countries including Germany and Austria appear to have bowed to Vladimir Putin’s ‘blackmail’ bid over energy supplies, it emerged last night.
In a disturbing development, several European gas distributors have indicated they will accept his demand that they pay for hydrocarbons in Russian currency.
Paying in roubles is banned under economic sanctions imposed on Russia after its invasion of Ukraine.
But according to reports, companies in Germany, Austria, Hungary and Slovakia intend to circumnavigate these rules.
Such a practice would bolster Russia’s finances which have been hit by sanctions and the cost of the continuing war. It would also demonstrate the effectiveness of president Putin’s bid to exploit continental Europe’s reliance on Russian gas.
The companies intend to open rouble accounts at Gazprombank in Switzerland. The bank would accept their payments in euros to ensure they do not breach sanctions.
But the bank, which is not subject to EU sanctions, would then convert these payments into roubles for onward payment to Russia.
Negotiations between buyers and Gazprom, the Russian state-controlled gas supplier, were understood to have intensified last night as the payment deadline approached.
The companies involved include two of Europe’s largest Russian gas importers, German-based Uniper and Austrian-based OMV. An Italian company, Eni, is apparently considering its options ahead of its next payment for Russian gas which is due next month.
In March, Putin decreed gas buyers from ‘hostile states’ – those opposed to his ‘special military operation’ – had to use this method to pay for their supplies.
The practice will guarantee Russia’s access to billions of roubles to support its economy and pay for its milider tary operations. Since the decree was issued, the European Commission has struggled to counter the demands given the huge reliance on Russian hydrocarbons across the continent.
Gas importers in Poland and Bulgaria, which have refused to sign up to the Kremlin scheme, had gas supplies halted by Russia on Wednesday, a decision European Commission president Ursula von Leyen, called ‘blackmail’.
The commission’s advisers have concluded any move to sanction Gazprombank – which would be the swiftest way of closing the loophole – could jeopardise the entire existing payment mechanism for Russian gas, resulting in a catastrophic cessation of shipments to the bloc.
Valdis Dombrovskis, commission executive vice-president, told The Financial Times it was primarily up to the individual companies that had signed the contracts with Gazprom to implement and interpret them. But he urged them to stick to the letter of these contracts.
OMV said it had analysed the Gazprom request in light of EU sanctions and was working on a sanctions-compliant solution.
Tiina Tuomela, chief financial officer of Uniper, said: ‘We consider that the amendment of the payment process complies with the sanctions law and so the payments are possible.’
‘The payments are possible’