EU seeks payment to continue buying gas from Russia

European Union flags outside the European Commission headquarters in Brussels, Belgium – Photo: REUTERS

On April 22, the European Commission (EC) issued a non-binding guideline document stating that EU companies can still make payments in euros or USD and then convert this money to ruble without violating EU sanctions against Russia.

Under the EC’s guidelines, companies can add to transactions a statement that they consider themselves fulfilled to their contractual obligations once payment has been made in a foreign currency (other than rubles).

At the end of March 2022, Russia warned Europe about the risk of gas supply cuts unless these countries pay for gas in rubles. The buyer will have to open an account at Russian bank Gazprombank and the euros or USD will then be converted to rubles for payment.

The EC considers that the required Russian ruble payment processes do not necessarily violate EU sanctions. However, the EC also emphasized that “the payment procedures requested by Russia are not clear at present”.

The EC’s guidance document says there are several options for EU companies to continue paying for gas to Russia in a legal manner. For example, EU companies can ask their Russian partners to fulfill their contractual obligations under the pre-rule payment decree in rubles. As such, they can still pay their dues in euros or USD.

The EU document advises companies to obtain confirmation from the Russian side of the implementation of this process.

According to Reuters news agency, the EC spokesman encouraged companies to maintain payments in the currency agreed on the contract with Russian energy company Gazprom. Accordingly, 97% is paid in euros or USD.

The document says that EU sanctions against Russia do not prohibit companies from opening accounts with Gazprombank or contacting the bank to find a suitable solution.