EU says legal Russian gas payments possible, warns against rouble accounts

3 minute read

A pressure gauge is pictured at a Ukrainian gas compressor station in the village of Boyarka near the capital Kiev January 20, 2009. REUTERS/Konstantin Chernichkin

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BRUSSELS, May 17 (Reuters) - The European Commission said on Tuesday opening accounts in roubles at a Russian bank to pay for gas would breach the bloc's sanctions against Moscow, after Brussels released updated guidance on how companies can legally keep buying Russian fuel.

Countries and companies have for weeks been asking for clarity on how they can proceed, after Moscow at the end of March demanded foreign buyers start to pay for gas in roubles or risk losing their supply.

In updated guidance, shared with EU countries on Friday, the Commission confirmed its previous advice that EU sanctions do not prevent companies from opening an account at a designated bank.

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It said companies can pay for Russian gas - provided they do so in the currency agreed in their existing contracts and declare the transaction completed when that currency is paid.

Nearly all of the supply contracts EU companies have with Russian gas giant Gazprom are in euros or dollars.

But a European Commission spokesman said on Tuesday that opening an account in roubles at Gazprombank would breach the EU's sanctions regime.

"It goes beyond the indications which we give to the member states of what was allowed under the regime," the spokesman told a regular press briefing.

Gazprom has not replied to a request for comment on Tuesday.

DIVISION

The further confusion comes as gas buyers in Europe, where Russian gas is widely used in heating homes and generating power, fumble with solving the payment conundrum and appeared to take different stances on the payment scheme.

Finland's state-owned energy provider Gasum said on Tuesday it would not make payments under Gazprom's proposed payment arrangement and that it would take its dispute over rouble payments to arbitration proceedings. read more

"In this situation, Gasum had no choice but to take the contract to arbitration. In this challenging situation, we will do our utmost to be able to supply our Finnish customers with the energy they need," Gasum CEO Mika Wiljanen said in a statement.

By contrast, French power firm Engie (ENGIE.PA) on Tuesday said it would make the next payment to the Russian gas giant in euros before the end of the month as both companies have agreed on a solution in line with European sanctions. read more

Uniper, Germany's largest importer of Russian gas, said on Tuesday it is transferring euros to an account at Gazprombank (GZPRI.MM). Germany's RWE (RWEG.DE) said on Monday it had opened an account in Russia to pay for gas in euros. read more

Italy's Eni (ENI.MI) said it will take a decision on payment for Russian gas in the coming hours or days. read more

EU countries are responsible for enforcing the bloc's sanctions - which were approved unanimously by the 27 member states. Brussels could launch legal action against a government that failed to enforce them.

Russian President Vladimir Putin's decree had said a transaction would only be deemed complete after the foreign currency was converted to roubles, and companies would need two bank accounts to enable this - one for each currency.

Russia cut gas supply to Bulgaria and Poland last month after they refused to comply with its rouble payment demand.

The Commission's guidance said companies should make a "clear statement" that when they pay euros or dollars, they consider their obligations under existing contracts to be fulfilled.

By ending its obligations once it deposits euros or dollars, a company could avoid being involved in dealing with the Russian central bank, which is under sanctions, and which could have been involved in converting the euros to roubles.

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Reporting by Kate Abnett, additional reporting by Stine Jacobsen; editing by Jan Strupczewski, Nick Macfie, Barbara Lewis and David Evans

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