German firm to meet Russia’s pay demands for gas

One of Germany’s biggest energy firms has said it is preparing to buy Russian gas using a payment system that critics say will undermine European Union sanctions.

Uniper says it will pay in euros which will be converted into roubles, meeting a Kremlin demand for all transactions to be made in the Russian currency.

Other European energy firms are reportedly preparing to do the same amid concerns about supply cuts.

Uniper said it had no choice but said it was still abiding by EU sanctions.

“We consider a payment conversion compliant with sanctions law and the Russian decree to be possible,” a spokesman told the BBC.

“For our company and for Germany as a whole, it is not possible to do without Russian gas in the short term; this would have dramatic consequences for our economy.”

Germany’s biggest energy supplier RWE declined to comment on how it would pay for Russian gas.

In late March, Russia said “unfriendly countries” would have to start paying for its oil and gas in roubles to prop up its currency after Western allies froze billions of dollars it held in foreign currencies overseas.

Under the decree, European importers must pay euros or dollars into an account at Gazprombank, the Swiss-based trading arm of Gazprom, and then convert this into roubles in a second account in Russia.

The European Commission said last week that if buyers of Russian gas could complete payments in euros and get confirmation of this before any conversion into roubles took place, that would not breach sanctions.

However there are different views among countries on how to interpret its initial guidance, and this week EC boss Ursula von der Lyon sparked confusion when she said firms could still be breaking the rules.

On Thursday, an EU official confirmed that any attempt to convert cash into roubles in Russia would be a “clear circumvention of sanctions” as the transaction would involve Russia’s central bank.

“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.”

On Tuesday, Poland and Bulgaria both refused to pay for gas in roubles leading to Russian state gas firm Gazprom shutting off supplies.

Both countries had already planned not to renew their contracts with Gazprom when they expired later in 2022.

Poland – one of the staunchest advocates of tougher sanctions on Russia – said the EU should penalise countries that used roubles to pay for Russian gas,

Climate minister Anna Moskwa singled out Germany, Hungary and Austria as resisting a gas embargo.

“We are counting on there being consequences for these countries [which pay in roubles] and that as a result they will cease paying in roubles,” she said. (BBC)

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