EU adds to confusion with latest gas-for-roubles advice

The commission sent revised guidelines for gas purchases to member states on May 13, 2022. PHOTO: REUTERS

BRUSSELS (BLOOMBERG) - The European Commission said that companies should not meet Moscow's demands to open a rouble bank account to pay for gas, even as the bloc continues to avoid putting that restriction in writing.

European companies have spent weeks trying to figure out how they can comply with a Russian order that they start paying for gas in roubles - without running afoul of EU sanctions. The bloc has issued two sets of guidance on the matter so far, both of which allow room for interpretation.

Gas prices fell on Monday (May 16) as the latest Brussels missive to member states stopped short of banning companies from opening bank accounts in roubles. At least four major European gas importers expect business to continue as usual.

But on Tuesday, European Commission spokesman Eric Mamer said that opening an account in roubles would go beyond the recommendations and constitute a breach of sanctions. Gas prices rose, before easing back again.

"Anything that goes beyond opening an account in the currency of the contract with Gazprombank and making a payment to that account and then issuing a statement saying that with that you consider you have finalised the payment contravenes the sanctions," Mr Mamer said.

There is still nothing in writing that explicitly stops companies from paying Gazprom PJSC in a way that the Russian company has indicated would be satisfactory. The issue has divided the bloc, with Poland and Bulgaria quickly deciding back in April that they would not engage with Russia's demands - and their gas was cut as a result.

Italy's Eni SpA, Germany's Uniper SE and Austria's OMV AG have all indicated they expect to find a way to keep paying. Prime Minister Mario Draghi went as far as to say that it was a gray area when it came to sanctions. And enforcing sanctions is a matter for member states, rather than the bloc.

"There is no official pronouncement of what it means to breach sanctions," he said. "Nobody has ever said anything about whether rouble payment breach sanctions."

Russia has called for companies to open two accounts - one in euros and one in roubles.

The commission sent revised guidelines for gas purchases to member states on Friday. In the updated recommendations, it said companies should make a clear statement that they consider their obligations fulfilled once they pay in euros or dollars.

The written guidance stopped short of addressing the requirement by Moscow to open a second account in roubles, but EU officials told reporters last month that such a move would contravene sanctions.

EU sanctions "do not prevent economic operators from opening a bank account in a designated bank for payments due under contracts for the supply of natural gas in a gaseous state, in the currency specified in those contracts," the commission's guidance said.

"Operators should make a clear statement that they intend to fulfil their obligations under existing contracts and consider their contractual obligations regarding the payment already fulfilled by paying in euros or dollars, in line with the existing contracts."

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