Italy Calls for Clarity on Putin's Ruble Order as Gas Bills Loom
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Loading... - Noemi Alonge
- 05 May 2022
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Italy renewed its call on the European Union to provide more detailed guidance on how natural gas buyers can pay for Russian supply without breaching sanctions.
Governments across Europe want clarity from the EU on what companies can and can’t do under sanctions rules to address Russia’s demands for gas payments in rubles. With the next tranche of funds due to be transferred later this month, there’s mounting concern that failure to meet Vladimir Putin’s terms could prompt Moscow to cut off supplies to more countries.
“Companies will have to complete payments in the coming days, and cannot be found unprepared,” Vannia Gava, undersecretary of state at Italy’s Ministry of Ecological Transition, said late Wednesday. Several nations have appealed to EU Energy Commissioner Kadri Simson for urgent guidance on payments, she said after representing Italy at an EU energy ministers’ meeting on Monday.
Moscow cut off gas supplies to Poland and Bulgaria last week for refusing to comply with its new order. Simson on Monday called the move “an unjustified breach” of contracts and “a warning that any member state could be next.” She said the EU would provide more detailed guidance in the coming days.
Read more: EU Aims to Dispel Ambiguity on Putin’s Rubles-for-Gas Demand
The comments from Italy’s Gava were echoed Thursday by French gas giant Engie SA. Chief Executive Officer Catherine MacGregor said she’s waiting for a “clearer framework” from the EU on the payments issue, describing a potential halt of Russian gas shipments to the region as “plausible.”
Moscow has demanded that foreign companies open two accounts with Gazprombank JSC -- one in a foreign currency and one in rubles -- saying the debt would only be settled once the payment is converted into Russian currency and deposited into the second account.
The EU last month published a document saying that buyers should carry on paying in euros, and said the Russian decree setting out the new rules didn’t preclude exemptions. It suggested companies seek confirmation from Moscow that a transaction could be considered closed once payment was made in euros. The bloc has said that opening an account in rubles would breach sanctions.
It’s unclear when the European Commission will issue new guidance, people with knowledge of the matter said Thursday.
“We’re currently awaiting from the Commission more precise guidelines on solutions that are possible for the payment in rubles,” Engie’s MacGregor said. “For us, it’s very important not to be exposed to the foreign-exchange risk.”
France gets less than a fifth of its gas from Russia, while Italy imports about 40% of its needs from the country.
Rome has moved quickly to reduce that reliance, signing recent deals for African supply. Read More...
