Italy will refuse to comply with new gas payment terms demanded by Moscow if the European Union (EU) concludes that Moscow is issuing a decree violating sanctions related to the Russia-Ukraine conflict, said someone knowledgeable about the matter.
In a preliminary assessment, the EU found that the Kremlin’s payment terms clearly violated its sanctions. The people, who spoke on condition of anonymity for the sake of privacy, said the Italian government is waiting for Brussels to complete its legal analysis before taking any further action.
President Vladimir Putin has warned that he will stop supplying gas to buyers who do not comply with a decree related to Russia’s Gazprom PJSC receiving payments in rubles. Losing that energy supply would pose a serious threat to the EU, which receives 40% of its gas from Russia.
Proportion of natural gas imports from Russia in 2020
On March 31, Putin issued a decree stipulating that gas buyers from “unfriendly” countries must open two accounts at Gazprombank, one in foreign currency and the other in a foreign currency. account in rubles. The Bank of Russia will convert payments in foreign currencies into rubles before transferring the payments to Gazprom. It is a Russian state-owned enterprise and the largest natural gas refining company in the world.
A preliminary analysis by lawyers for the European Commission, the EU’s executive body, suggests that payments using the system would breach the bloc’s sanctions, a person with knowledge of the matter said. this said. Another said lawyers for the Council of Europe – which includes leaders from 27 member states – also concurred with the commission’s assessment.
Citing an EU assessment, the Dutch government last week asked energy companies in the Netherlands to refuse new Russian payment terms. Member states including Italy are continuing to review the report. Meanwhile, Moscow can still provide a clear explanation or adjust the terms.
The EU is racing to find alternative energy sources as it wants to become less dependent on Russia. During a call Tuesday with allies in the United States, Europe and Asia, Italian Prime Minister Mario Draghi expressed his wish that leaders could accelerate the diversification of gas imports.
In addition, Italy will announce new energy deals with the Republic of Congo and Angola this week. This could bring Italy an extra 6.5 billion cubic meters of natural gas per year. Along with the additional volume coming from Algeria, Italy will replace more than half of the gas it receives from Russia early next year.
Refer to Bloomberg
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