Because Eni and the government do not know if and how to pay for Russian gas
The European Union considers ruble payments for Russian gas a violation of sanctions; Moscow, then, could interrupt supplies as already done to Poland and Bulgaria. Facts and insights
"Russian gas importers find themselves between a rock and a hard place", Il Sole 24 Ore writes today, because "if they pay in the old way they risk having their supplies cut off, if they don't pay – perhaps even giving up gas, for boycott Moscow – violate international contracts. If, on the other hand, they adapt to the new mechanism, they can get into trouble with the sanctions ”.
THE LINE OF RUSSIA
Since Wednesday, the Russian state-owned company Gazprom has suspended the flows of natural gas to Poland and Bulgaria , motivating the decision with the non-payment of supplies in rubles, the Russian currency, as established on March 31 by President Vladimir Putin. The Kremlin spokesman, Dmitry Peskov, said that "payments in the appropriate form will be the basis for the continuation of supplies".
THE LINE OF THE EUROPEAN COMMISSION
However, the European Commission – which depends heavily on Russian gas, for about 40 percent of the total imported at EU level – is opposed to transactions in rubles because it thinks they damage the sanctioning pressure applied to Russia after the invasion of Ukraine.
"Our indication is very clear," said Commission President Ursula von der Leyen. "If it is not stipulated in the contract, paying in rubles is a violation of our sanctions." Violating this provision represents "a high risk for companies," he continued.
97% of gas supply contracts between the European Union and Russia are denominated in euros or dollars, not rubles.
POSSIBLE ESCAPES?
As reconstructed by Politico , in reality the indications given by Brussels would not be so clear. In recent weeks, the Commission has ruled that European companies can open an account with the Russian bank Gazprombank (as requested by Russia) to make payments for gas in euros or dollars (as foreseen in the previously stipulated contracts) and finally release , a declaration that their payment obligation has ended with the deposit of the funds into the account. This last clarification allows European companies to free themselves from the conversion into rubles, which would be carried out by the Russians (at the exchange rate set by the Kremlin), and therefore to avoid breaking sanctions.
However, some European officials believe that the Brussels mechanism is ambiguous and that it offloads the weight (and risks) of negotiations with Gazprom on companies.
RUSSIA IS NOT IN THE GAME
Il Sole 24 Ore explains that “more precise guidelines could be defined on 2 May, when the European Council of Energy Ministers will meet. But the Commission has already begun to tighten the links, pointing out that if Moscow considers the transaction closed only when Gazprom receives the rubles then for a certain period the euros paid remain 'entirely in the hands of the Russian authorities, including the Central Bank': it's like granting Moscow a loan in hard currency ”.
Putin's decree, in fact, considers payment obligations met only when the conversion into rubles is complete. According to Politico , then, in order for the Commission's "trick" to work, Russia should "agree to play along": the decree also provides for the rest of the deliberately vague exemptions.
However, even if Russia cannot do without the European market – given the impossibility of immediately replacing it with a new one, perhaps in Asia – the Kremlin does not seem to want to collaborate. Both Poland and Bulgaria said they made payments on time for gas, but not in rubles (they consider the request a breach of contractual terms), and supplies were stopped anyway.
Neither Warsaw nor Sofia, however, risk the energy crisis: they do not use gas to generate electricity and have alternative suppliers; not surprisingly, they had already said they did not want to renew contracts with Gazprom, which expire in 2022.
Italy or Germany, on the other hand, are much more vulnerable to a disruption of flows from Russia.
THE POSITIONS OF AUSTRIA AND GERMANY
Austria has announced that the gas company OMV will continue to pay for Russian gas in euros, as foreseen by the contracts. Germany also told its companies to follow the Commission's guidelines, i.e. to make payments in euros or dollars into their Gazprombank account and declare the transaction closed.
WHAT SAYS ABOUT MAIO, WHILE ENI IS SILENT
Eni has not made any comments to POLITICO on the situation. Foreign Minister Luigi Di Maio declared that "the Russian request to pay for gas in rubles is a breach of the contract" and that "our contracts provide for payment in euros and we want to pay in euros".
The deadline for the next gas payment, Al Jazeera writes, is May 20.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/pagamento-gas-russo-italia-eni/ on Fri, 29 Apr 2022 08:05:46 +0000.