Germany and Italy approved Russian gas payments after nod from Brussels – sources

A model of the natural gas pipeline is seen in front of the word displayed the colors of the EU and Russia flag in this illustration taken March 8, 2022. REUTERS/Dado Ruvic/Illustration

Join now for FREE unlimited access to Reuters.com

  • Some EU states refuse to comply with Russian payment demands
  • Others approve Russian payments after talks with EU – sources
  • Diplomats say EU guidance intentionally vague

MILAN/BERLIN, May 20 (Reuters) – Germany and Italy have told companies they can open ruble accounts to continue buying Russian gas without breaching sanctions on Moscow following talks with the European Union, sources said.

The debate over Russia’s demand that foreign buyers pay for gas in rubles has tested the resolve of European governments to take a hard line against Moscow over the war in Ukraine.

Poland, Bulgaria and Finland refused to comply with Moscow’s demand that importers pay for gas through ruble accounts with Gazprombank and their supplies were cut off.

Join now for FREE unlimited access to Reuters.com

Other member states, however, have been unwilling to steer companies into actions that could result in the loss of vital supplies of Russian gas that heats homes and powers factories.

Brussels has given two sets of written guidelines on how to buy Russian gas without breaching sanctions, but the legal route remains unclear as EU officials also advised companies in a closed-door meeting not to not open ruble accounts with Gazprombank.

Some diplomats in Brussels from EU member states said they believed the advice was intentionally vague to allow countries to open ruble accounts and continue buying Russian gas.

“It feels like it leaves the door open for business as usual,” said a diplomat, adding that in his view it risked undermining EU unity against Russia if companies from some countries opened accounts in rubles but not others.

“They needed to create a level of creative ambiguity,” said a second diplomat, referring to advice from the Commission. “The purpose of creative ambiguity is to create just enough room for all the different interpretations.”

The Commission declined to comment on the discussions.

A Commission spokesman said on Thursday that it was not “advisable” for companies to open accounts in roubles. Read more

‘GRAY ZONE’

Two sources told Reuters that German gas importers have been told by Berlin that they can open accounts in rubles to pay for Russian gas without violating sanctions, as long as the payments they make to Gazprombank are not within Russian currency.

The sources said Germany, which is the biggest importer of Russian gas in the region, has always acted on the issue in close coordination with the EU.

The Italian government has also spoken to the European Commission and received clarification on how to legally buy Russian gas, a senior government source told Reuters.

This happened before Italian energy company Eni (ENI.MI) announced on Tuesday that it had started proceedings to open two accounts, one in euros and the other in roubles, the company said. source.

“The decision is in line with what was communicated by the department,” the source said, referring to the European Commission’s energy department.

Italian Prime Minister Mario Draghi said last week it was a “grey area” over whether compliance with Russia’s payment system would breach sanctions, with no official ruling on that.

Draghi’s office declined to comment on Friday.

In its written guidelines, the EU said companies can buy Russian gas without breaching sanctions if they pay in the currency of their existing contracts – and say it fulfills their contractual obligations.

Most of the contracts that European companies have with Gazprom are in euros or dollars.

However, the guidelines did not explicitly say that opening ruble accounts for those payments to be converted into Russian currency would be a violation of EU sanctions.

Katja Yafimava, senior researcher at the Oxford Institute for Energy Studies, said there was no legal basis to suggest opening a ruble account violated sanctions.

“Nothing in the written guidelines prevents buyers from opening such accounts. Although verbal statements from the European Commission have created ambiguity, it is the written guidelines that matter,” she said.

National governments are responsible for applying EU sanctions, which have been approved by all 27 member states.

Brussels could take legal action against governments that fail to enforce them, but member states disagree on gas payments.

Poland has asked Brussels for clearer advice on whether companies can open a ruble account.

A spokesman for the Dutch Ministry of Economic Affairs said the country was pushing for a clear EU position, to “draw a line for the whole EU”.

Join now for FREE unlimited access to Reuters.com

Reporting by Markus Wacket, Stephen Jewkes, Giuseppe Fonte, Nina Chestney, Kate Abnett and Toby Sterling; Editing by David Clarke

Our standards: The Thomson Reuters Trust Principles.

Leave a Reply