Original Article By Charles Jewers At DailyMail.co.uk

  • Gazprom halted Polish and Bulgarian gas supplies for refusing to pay in roubles
  • It came after Vladimir Putin last month ordered European gas companies to pay for their Russian supplies in the country’s currency amid Western sanctions 
  • Gas companies in Germany, Austria, Slovakia and Hungary now intend to comply
  • It is expected they will pay into accounts with Swiss-based Gazprombank, which would convert payments made in euros or dollars into roubles

Some of Europe’s biggest energy companies are preparing to undercut EU sanctions by agreeing to pay for Russian gas in roubles, according to reports.

As ordered by Vladimir Putin, large gas companies in Germany, Austria, Slovakia and Hungary intend to open accounts with Gazprombank after Moscow halted gas supplies to Bulgaria and Poland yesterday for their refusal to pay in roubles.

Russia’s decision resulted in European gas prices surging by 24 percent yesterday, with prices on Thursday rising a further 4 percent. Western leaders accused Moscow of blackmail and of trying shake the EU’s unity over its support of Ukraine.

But according to the Financial Times, firms including Germany’s Uniper and Austria’s OMV will open rouble accounts at the Swiss-based bank, which was founded in 1990 specifically to serve Russia’s Gazprom – the world’s largest supplier of natural gas.

President Putin last month ordered Western countries to pay for their gas supplies from the state-owned company in roubles, as Russia’s own economy wilts under crippling Western sanctions over the Kremlin’s invasion.

Otherwise, Putin said, the taps would be turned off and Europe would be without Russian supplies. What some thought was an idle threat became reality on Wednesday when Poland and Bulgaria saw their Gazprom supplies halted.

A senior European Union official warned on Thursday that the EU will consider any energy company opening an account with Gazprombank in roubles as a violation of sanctions that have been placed on Russia.

The official also said the EU cannot accept that payments in euros to Russia for gas are considered completed by Moscow only after they are converted into roubles. 

‘What we cannot accept is that companies are obliged to open a second account and that between the first and second account, the amount in euros is in the full hands of the Russian authorities and the Russian Central Bank, and that the payment is only complete when it is converted into roubles,’ the official said.

They noted that could be considered a loan to the Russian central bank, adding: ‘This is absolutely clear circumvention of the sanctions.’

Another senior EU official said that there is ‘consensus on this from all member states, is that none is willing to pay’ in roubles.

Sources close to negotiations between European purchasers and Gazprom told the FT that talks have now accelerated with payment deadlines fast approaching.

Even though Russia has demanded rouble payments for its gas, the payments system it has proposed would see the use of accounts at Gazprombank, which would convert payments made in euros or dollars into roubles.

This offers a potential loophole that some countries could try to use in order to keep buying Russian gas against Western currencies, despite Western sanctions.

The European Commission said last week that if buyers of Russian gas confirmed payment was complete once they had deposited euros, as opposed to later when the euros have been converted to roubles, that would not breach sanctions.

Europe gets about 40 percent of its gas from Russia, paying 200 million to 800 million euros per day so far this year – funding Moscow’s war machine.

Currently, nearly all Russian gas purchase contracts are denominated in euros or U.S. dollars, according to consultancy Rystad Energy. Payments in roubles would benefit the Russian economy and shore up its currency.

Germany’s Düsseldorf-based Uniper (one of the financiers of the Nord Steam 2 project) told newspaper Rheinische Post on Thursday that it will transfer payments for Russian gas to a Russian bank and no longer to a Europe-based bank.

‘The plan is to make our payments in euros to an account in Russia,’ the daily paper cited a Uniper spokesperson as saying.

Uniper on Wednesday said it considered Russian gas flows into Germany secure for now – despite the halt in supplies to Poland and Bulgaria – as transit volumes headed elsewhere would be unaffected, Germany’s top importer of Russian gas said.

Meanwhile, Austrian energy group OMV – one of the largest importers of Russian gas and based in Vienna –  is now preparing to open rouble accounts at Gazprombank, the FT said on Thursday, citing people with knowledge of the preparations.

Austria’s government responded on Wednesday that Russian natural gas deliveries to the country continued unrestricted and there was no indication that would change, while it was scrambling to find alternative sources.

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