Some of Europe’s Largest Energy Firms Are Looking Into Using Russian Payment System

Some of Europe’s largest energy firms are now closely looking at the possibility of using the Russian payment system for gas. That’s according to a report in the Financial Times on Thursday. The Kremlin is demanding they use the system if they want Russian gas.

AVOIDING SANCTIONS

“Several traders, maybe more than five, have started payments,” one source said on condition of anonymity because they were not authorized to speak to the media.

Sources told the newspaper that gas distributors in Germany, Austria, Hungary, and Slovakia aim to open ruble accounts at Gazprombank in Switzerland. They said that negotiations between European buyers and Russian gas supplier Gazprom have intensified as payment deadlines approach.

German Chancellor Olaf Scholz told reporters that his country could not risk losing Russian gas supplies in the short term. He was visiting Tokyo at the time.

“Any interruption would have consequences for the economic situation. That is clear, and the government is also very clear about that,” Scholz told reporters.

“We know that it is a challenge that many European countries, including Germany, are dependent on imports of fossil resources from Russia. And that’s why we set out very early, even long before the outbreak of this war, to analyze this situation in concrete terms and to derive decisions from it.

Under the new mechanism, European companies would continue to pay Gazprombank for their imports in euros in order not to breach the sanctions regime. The Russian bank, which is not under EU sanctions, would then, at their request, convert euro-denominated deposits into rubles in a second account opened in their name, for onward payment to the Russian gas provider.

AUSTRIA DENIES IT

According to Bloomberg, on Wednesday the Austrian firm denied that it plans to open an account in Switzerland. Austria’s Chancellor Karl Nehammer earlier described the reports as fake news.

FT’s sources said that Gazprom’s other large customer, Italy’s Eni, is evaluating its options. The company has until the end of May when its next payment for Russian supplies is due.

This plan seems ridiculous at first blush if true. Why doesn’t the West just cancel the sanctions? If this comes to pass, all the sanctions will do is hurt the US.

The United States and the European Union have warned against giving in to Russian “blackmail” over gas supplies to Europe. Blackmail doesn’t seem like the proper word.

However, Biden said Thursday that the U.S. was helping its European allies to diversify gas supplies.

POLAND’S STILL GETTING RUSSIAN GAS VIA GERMANY

Poland continues to buy Russian natural gas from Germany via reverse flows. Its supplies were suspended when they refused to pay in rubles.

“This week Poland refused to pay for the Russian gas with the new terms, in rubles. It was grandly announced that they no longer needed Russian gas and would not buy it anymore. But in fact, Poland keeps buying Russian gas after the direct supply was halted. It now buys the gas from Germany, and it comes back to Poland with the reverse flow via the Yamal-Europe pipeline,” Gazprom’s official representative Sergey Kupriyanov sputtered.

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