Gazprombank waiver extended as EU struggles to cut gas ties

GAS traders supplying the EU market will be allowed to pay Russia’s sanctioned Gazprombank for another five months as Rishi Sunak scrambles to avoid an energy crisis.

Traders in Britain can now send money to the bank up until Oct 31 this year after the Chancellor extended a special licence, effectively allowing traders to comply with the Kremlin’s demands on how gas is paid for.

It comes despite efforts to cut Europe’s reliance on the Kremlin for energy, which is helping to boost Russia’s coffers. The bloc agreed this week to a ban on most Russian oil imports, and wants to cut gas imports by two thirds by the end of this year.

The Government said it wants to “support and effect a smooth transition away from Russian gas”.

The Treasury hit Gazprombank with an asset freeze in March following Russia’s invasion of Ukraine, giving parties until April 23 to wind down their business with it.

However, the bank’s importance to energy supplies has grown after President Vladimir Putin demanded on April 1 that “unfriendly countries” must pay for Russian gas in roubles through Gazprombank.

Many companies trading gas into the EU are based in the UK, meaning they risked either breaching sanctions or having gas supplies cut off unless the Treasury stepped in.

In April the Treasury issued a licence allowing payments to Gazprombank “for the purpose of making gas available for use in the European Union”. This has been extended from May 31 to Oct 31.

Most European buyers have complied with the Kremlin’s demands to pay through Gazprombank.

The Kremlin has started to cut off gas supplies to companies that have not agreed to its demand. On Wednesday it cut off access to Shell in Germany and Denmark’s Orsted.

It had already cut supplies to Holland on Tuesday as well as Poland, Bulgaria and Finland last month.