EU clarifies how companies can legally pay for Russian gas, ENI and RWE open bank accounts

The European Commission has confirmed how European Union companies can pay for Russian gas without breaching the bloc’s sanctions against Russia, in updated guidance on the issue seen by Reuters.

The Commission told countries last month that European companies may be able to pay for Russian gas without breaching EU sanctions against Moscow, but only if they followed certain conditions, after Russia demanded foreign buyers start paying for gas in roubles or risk losing their supply.

In updated guidance, shared with EU countries on Friday and seen by Reuters, the Commission confirmed its previous advice that EU sanctions do not prevent companies from opening an account at a designated bank, and companies can pay for Russian gas – so long as they do so in the currency agreed in their existing contracts and declare the transaction completed when that currency is paid.

Nearly all of the supply contracts EU companies have with Russian gas giant Gazprom are in euros or dollars.

Russia cut gas supply to Poland and Bulgaria last month for refusing to comply with its rouble payment demand. Several EU governments and large importers have sought more clarity from Brussels on whether they can keep buying gas, which heats homes, produces electricity and powers factories across Europe.

Companies should make a “clear statement” saying that when they pay euros or dollars, they consider their obligations under existing contracts to be fulfilled, the guidance said.

It should be understood that “such payments in that currency discharge definitively the economic operator from the payment obligations under those contracts, without any further actions from their side as regards the payment,” it said.

By ending its obligations once it deposits euros or dollars, a company could avoid being involved in dealing with the Russian central bank, which is under sanctions, and which could have been involved in converting the euros to roubles.

President Vladimir Putin’s decree had said a transaction would only be deemed complete after the foreign currency was converted to roubles.

Eni and RWE open bank accounts

Italian energy group Eni said it will open bank accounts this week to pay for Russian gas after clarification that such a move will not breach sanctions, two sources said on Monday (16 May).

“The clarified guidelines have given a green light for Eni,” one of the sources said.

Last week sources told Reuters Eni would begin the process of opening an account in roubles this week to pay for Russian gas unless told that would breach sanctions.

The updated guidance has essentially offered Eni assurances nothing contrary is in its way, the second source said.

Earlier on Monday, Germany’s RWE said it had opened an account in Russia to pay for gas in euros.

“Eni is still carrying out its assessments and at the moment has not started any procedure to open two accounts,” an Eni spokesman said.

Eni, one of Europe’s biggest importers of Russian gas, faces a deadline to pay Russia’s state-owned Gazprom around May 20.

Under the new Russian payment system, introduced in response to sweeping Western sanctions imposed after Moscow invaded Ukraine, buyers are obliged to deposit euros or dollars into an account at private Russian bank Gazprombank.

The bank will then convert the cash into roubles, place the proceeds in another account owned by the foreign buyer and transfer the payment in Russian currency to Gazprom.

Italy, which last year sourced around 40% of its gas from Russia, is scrambling to find alternative supplies.

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