Brussels says EU states agree they are not willing to pay for Russian gas in roubles

BRUSSELS/LONDON (BLOOMBERG) - EU countries all agree that they will not pay Russia directly in roubles for their imports of gas, noting that the deadline for next payments was expected to be May 20, senior European Union officials said on Thursday (April 28).

“What we do know, and there is consensus on this from all member states, is that none is willing to pay” in roubles, the official told a news briefing, adding that the EU Commission did not have an overview of how many buyers have opened accounts for gas payments with Gazprombank.

An earlier report said several EU countries had sought clearer guidance from the bloc on Russia's demand to pay for gas in roubles.

The European Commission told the ambassadors at a closed-door meeting on Wednesday that it will fine-tune the wording of its guidelines, according to people familiar with the discussions. A number of countries who had raised the issue said they want the commission to clarify that buyers don't have any workarounds to acquiesce to the Kremlin's demands, the people said.

The confusion arose after Russia cut off gas sales to Poland and Bulgaria, which refused to pay in roubles. At the same time, four European companies went ahead and made payments in roubles, although it's not clear whether they were from EU countries. Others are said to be prepared to open rouble accounts.

Poland and Bulgaria - backed by Greece, Slovakia, Denmark, Latvia, Belgium, Austria, Hungary, and Finland - complained in the meeting about the lack of clarity and details in some of the commission guidelines, according to the people. Poland said the selective interpretation of the Russian decree was a tool for Russia to break EU solidarity.

Poland and Bulgaria also told the other EU ambassadors that they benefited from alternative supply arrangements and that Moscow's move didn't pose a direct threat to their economy at this stage, the people said.

The bloc has been preparing for the weaponisation of energy deliveries to Europe to avoid interruption of gas flows. Germany and Greece noted that they were ready to provide supplies to Poland and Bulgaria.

Russian President Vladimir Putin's decree stipulates that European gas buyers open two accounts with Gazprombank JSC - one in a foreign currency and one in roubles. Gazprombank would then be responsible for converting the foreign currency into roubles and transferring the money to Gazprom. The EU said that Russia's process for any exemptions remains unclear.

In a question-and-answer document published last week, the EU said that the Kremlin's payment procedure would be a breach of contract, as well as EU sanctions. But the bloc also said payments may be allowed in euros and dollars as long as any legal obligations end once the initial euro or dollar payment is made to Gazprombank.

European Commission President Ursula von der Leyen's warning on Wednesday was more definitive.

"It's very clear and the request from the Russian side to pay in roubles is a unilateral decision and not according to the contracts," she told reporters. "Companies with such contracts should not accede to the Russian demands. This would be a breach of the sanctions so a high risk for the companies."

It remains unclear whether Moscow would accept that transactions are complete after the initial payment is made in euros or dollars, even if the funds are then converted to roubles.

Member states are expected to discuss the issue at an upcoming meeting of EU energy ministers, two of the people said. The EU has scheduled the meeting for May 2.