President Vladimir Putin said last month that “unfriendly” nations should pay in rubles, instead of the euros or dollars mentioned in contracts. Buyers could make payments in euros or dollars to an account at Russia’s Gazprombank, which would then convert the funds into rubles and transfer them to a second account from which the payment would be made in Russia. Germany’s Uniper said on Thursday it would continue to pay for Russian gas in euros, but added that it believed a “payment conversion under sanctions law” was possible. “Uniper is in talks with its contractual partner on these payment methods and is also in close coordination with the German government,” the company said in a statement. A Uniper spokesman told the Rheinische Post on Thursday that the company would make payments to a Russian bank in euros instead of a European-based bank. Germany reduced Russian gas consumption to 35% of imports from 55% before the war in Ukraine, but says it must continue to buy from Moscow at least until next year to avoid a deep recession. Uniper said it could not cope without Russian gas in the short term. “This would have dramatic consequences for our economy,” she said in a statement. Austrian energy company OMV (OMVJF) said on Thursday it had considered a new payment request from Russian gas giant Gazprom and was “now working on a solution compatible with sanctions”. the new payment terms. Gazprom said it had suspended gas supplies to Bulgaria and Poland because they refused to pay in rubles, fueling fears that other EU countries – including major gas importers Germany and Italy – could be next.
Sanctions window?
There could be a solution. The European Commission issued directives to EU member states last week saying it was “likely” that buyers could comply with the new Russian rules without conflicting with EU law. EU governments are likely to allow the payment mechanism to move forward, the Eurasia Group said in a note on Thursday. Other analysts are not so sure and say the process will not be simple. European customers could inadvertently be penalized if they use Gazprombank’s mechanism. “The ruble conversion process may involve entities that are subject to sanctions and this may not be obvious to the buyer,” Kaushal Ramesh, a senior analyst at Rystad Energy, told CNN Business. The new payment mechanism will probably take some time to implement, but Gazprom is expected to show flexibility with the upcoming payment deadlines, the Eurasia Group said. – Robert North contributed to this report.
