EU warns companies not to buy Russian gas in rubles | Oil and Gas News

European Fee President Ursula von der Leyen warned firms to not bend to Russia’s calls for to pay for gasoline in rubles, because the continent scrambles to answer Moscow’s transfer to begin switching off provides.

Gazprom PJSC turned off the faucets to Poland and Bulgaria on Wednesday in a dramatic escalation of the standoff between Russia and Ukraine’s European allies. Moscow was making good on a menace to chop provides if funds weren’t made in native forex, and a focus now turns to how Germany and Italy — the most important European consumers of Russian gasoline — will reply.

Europe is attempting to keep up a united entrance, however in response to an individual near Gazprom, some European firms are taking steps that will permit them to adjust to Moscow’s new guidelines. Uniper SE, a big German purchaser of Russian power, has stated it believes it may well sustain purchases with out breaching sanctions.

“Firms with such contracts shouldn’t accede to the Russian calls for,” von der Leyen stated. “This could be a breach of the sanctions so a excessive threat for the businesses.”

EU unity could now be examined: as cost deadlines begin falling due within the subsequent month, governments and firms throughout Europe should resolve whether or not to satisfy the brand new guidelines or face the prospect of gasoline rationing.

Share of natural gas imports coming from Russia, 2020

Benchmark costs surged on Wednesday greater than 20% however then eased as merchants reassessed the possibilities of a wider cutoff.

Germany additionally reiterated that firms ought to preserve paying in euros, following EU pointers, and Financial system Minister Robert Habeck stated the specter of flows being severed needed to be taken significantly.

“Russia is exhibiting that it’s able to get severe, that if one doesn’t adjust to provide contracts or funds, they’re able to put a cease to gasoline deliveries,” he stated. “We’ve got to take that significantly, and that additionally goes for different European international locations. I take that significantly.”

However some firms nonetheless look like looking for workarounds — and pointers from the EU final week could also be encouraging them. The bloc printed a Q&A saying that firms ought to keep it up paying in euros, however that the Russian decree setting out the brand new guidelines didn’t preclude exemptions. It advised firms to hunt affirmation from Moscow that paying in euros was nonetheless doable. Uniper has stated it’s speaking to Gazprom.

Habeck stated it’s nonetheless not clear how Russia will react if firms pay in euros.

Based on an individual near Gazprom, 4 European gasoline consumers have already paid for provides in rubles and 10 have arrange accounts permitting them to adjust to the brand new guidelines. A number of firms have stated they’ll proceed paying in euros, with out laying out the mechanism clearly.

Fee schedules are staggered throughout the continent and Poland seems to have been among the many first whose invoice got here due in rubles. Others have extra time: Uniper, for instance, isn’t on account of pay till late Might.

Warsaw has additionally been notably vociferous in its criticism of Russia all through the warfare and has been amongst these lobbying for power sanctions. Whereas the EU has to date protected most power provides from restrictions, ambassadors met on Wednesday and have been anticipated to debate restrictions on oil.

Key European Buyers of Russian Gas |

Final month President Vladimir Putin shocked European governments and markets by demanding gasoline needs to be paid for in rubles — through a sophisticated mechanism involving establishing two linked financial institution accounts to deal with the overseas alternate transaction.

When he first introduced the demand, Putin stated shifting to rubles would assist shield Russia’s large gasoline revenues from sanctions or seizure by the EU. The transfer additionally appeared geared toward guaranteeing Gazprombank, considered one of few large state banks not hit with the severest sanctions, would stay largely untouched.

Putin has additionally repeatedly highlighted the financial and political prices of upper power costs in Europe, suggesting the Kremlin could imagine that western governments received’t have the ability to stand up to the stress domestically of a cutoff so long as Moscow can.

–With help from Anna Shiryaevskaya, Ewa Krukowska, Iain Rogers and Carolynn Look.

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