Sanctions-compliant payment: Italian energy giant opens ruble account

Russia demands that EU countries pay their gas bills in rubles.

Sanctions-compliant payment: Italian energy giant opens ruble account

Russia demands that EU countries pay their gas bills in rubles. One of the largest importers of Russian gas, the Italian utility Eni, is likely to bow to the pressure - without violating the sanctions. The German EnBW is also changing its payment mechanism.

Several European gas suppliers are confident that they have found a payment mechanism for Russian gas that is acceptable to both the EU and Moscow. Italian energy group Eni said on Tuesday that the company would open an account in euros and one in rubles with Gazprombank "in the coming days". So Eni can pay in euros, the Russian bank then converts it into rubles.

Russian President Vladimir Putin had ordered gas deliveries to be paid for in rubles. The Europeans see this as a subsequent change in the current treaties and reject it. Companies complying with Russian demands risk being prosecuted for violating EU sanctions.

According to Eni, the Russian authorities confirmed that "invoicing and payment will continue to be made in euros" and "an operator of the Moscow Stock Exchange will carry out the conversion into rubles within 48 hours without the involvement of the Central Bank of Russia". Initially, Moscow had envisaged a conversion mechanism via the central bank, but this would clearly violate EU sanctions.

Another Kremlin decree then introduced a new two-step payment procedure, whereby first deposits are made in euros or dollars in one Gazprombank account and then converted into rubles in a second account at the same institution. On Tuesday, however, a spokesman for the EU Commission confirmed that opening a ruble account at Gazprombank already constitutes a violation of EU sanctions. However, the spokesman also stressed that it is up to the authorities of the EU member states to enforce compliance with the jointly agreed sanctions. Brussels could launch EU infringement procedures against member states in the event of omissions.

When deciding to adapt to the new payment system via Gazprombank, Eni referred to agreements with the Italian authorities. It's about avoiding "a potential disruption to the gas supply," the company said. The Italian state holds a good 30 percent of Eni's shares.

Italy covers 95 percent of its gas needs with imports, of which around 40 percent came from Russia in 2021. Germany is in a similar situation. Economics Minister Robert Habeck had assured on Monday that the EU requirements for gas payments would be met. However, he remained vague on the details. For example, it was initially unclear whether German importers would open ruble accounts with Gazprombank.

The head of EnBW, Frank Mastiaux, told the "Süddeutsche Zeitung" that the new "mechanism is in place". EnBW also wants to pay "in accordance with the sanctions" in euros, and the conversion into rubles at Gazprombank is to take place "subsequently". "We did a test with a positive result." "We'll see" how long the mechanism works.

French energy group Engie has also agreed with Gazprom on a "solution that appears to meet both Gazprom's expectations and our own expectations" in relation to "currency risks" and "what we mean by EU sanctions", said Engie boss Catherine MacGregor on Tuesday.


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