Germany, Italy can pay for Russian gas in rubles

Germany and Italy, after consulting the EU, are said to have allowed local companies to open accounts in rubles to buy Russian gas.

Reuters On May 20, citing two Berlin sources, German gas importers were told they could open accounts in rubles to pay for Russian gas without violating sanctions, as long as the payments they make to Gazprombank are not in Russian currency.

According to sources, Germany, the region’s largest importer of Russian gas, has been working closely with the European Union (EU) to resolve the issue.

The Italian government has also spoken to the European Commission and received instructions on how to buy gas from Russia without violating sanctions, a senior government source told Reuters. The guidance comes before Italian energy company Eni said on May 17 it had initiated procedures to open two accounts, one in euros and one in rubles, with Russia’s Gazprombank.

“This decision is in line with what was announced by the European Commission’s Energy Agency,” the source said.

The office of Italian Prime Minister Mario Draghi has not yet commented on the report. Most EU companies’ contracts with Russia’s Gazprom provide for payments in euros or dollars.

Model of a natural gas pipeline in front of EU and Russian flags in an illustration in March Photo: Reuters

Model of a natural gas pipeline in front of EU and Russian flags in March Figure Photo: Reuters.

The EU had previously issued two sets of written guidelines on how to buy Russian gas without violating sanctions, but the legal route was still unclear when EU officials at a closed meeting also recommended: The company does not open a ruble account with Gazprombank .

Some EU diplomats say the directive’s provision is “deliberately ambiguous” to allow companies to open accounts denominated in rubles and continue buying Russian gas.

“There is a feeling that the EU is still leaving the door open for companies to buy gas as usual,” said a foreign minister, adding that the move could undermine EU unity if the company is based in rubles, while others do not.

The European Commission declined to comment on the report, while a spokesman said on May 19 it was “not recommended” for companies to open accounts in rubles.

At the end of March, Russia demanded that “unfriendly” countries pay for their gas purchases in rubles. Countries classified as “unfriendly” by Russia include the US, EU member states, the UK, Japan, Canada, Norway, Singapore, South Korea, Switzerland and Ukraine.

Russia’s request has caused controversy in European countries. The European Commission said last month that European companies signing gas contracts with Russia that require payments in euros or dollars should not meet the requirements for payments in rubles.

Gazprom Export, the gas export subsidiary of Russia’s Gazprom, announced yesterday that it will cut gas to Finland because it has not yet received payment in rubles for the April contract.

The EU's dependence on imported energy

The EU’s dependence on energy imports. Graphic: visual capitalist.

Huyen Le (Corresponding Reuters, TASS)