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European Commission president Ursula von der Leyen attends a meeting in Brussels, Belgium, April 27 2022. Picture: REUTERS/KENZO TRIBOULLARD
European Commission president Ursula von der Leyen attends a meeting in Brussels, Belgium, April 27 2022. Picture: REUTERS/KENZO TRIBOULLARD

Europe’s response to Russian demands that gas must be paid for in roubles is in disarray as companies seek workarounds to keep vital supplies flowing and governments tussle over how hard a line to take against Moscow.

European Commission president Ursula von der Leyen warned companies on Wednesday not to bend to Russia’s demands, saying that doing so would breach sanctions. But companies are taking steps to at least partly comply with Russia’s demands, and the bloc’s own guidance issued last week appeared to give them cover to do so.

Hungary’s government confirmed on Thursday that it is paying euros to Russia’s Gazprombank, which it is then allowing to be converted into roubles. It’s the clearest indication yet that a compromise may be possible.

In Brussels, splits are emerging. Poland — which has refused to adopt the new terms and saw its gas suddenly cut off on Wednesday — has been leading a push for the EU to clarify its guidelines so that companies can’t exploit loopholes. German economy minister Robert Habeck appeared to leave the door open to a compromise on Wednesday, though he said it wasn’t clear how Moscow would respond.


German utility Uniper, a big client of Russian gas, has said publicly that it believes it can keep up purchases without breaching sanctions. And in Italy — another major buyer — Eni is preparing steps that would allow it to comply with the new demands, according to people familiar with the situation.

Bloomberg reported on Wednesday that four European buyers have already paid in roubles and 10 have opened the accounts at Gazprombank needed to meet the new rules. Hungary’s cabinet minister Gergely Gulyas confirmed they were one of the 10.

Gas prices fell on Thursday as traders reassessed the risk that Russian President Vladimir Putin would cut off other countries in Europe next. 

As payment deadlines fall due, companies and governments need to decide whether to accept Russian demands — strengthening Moscow in its war in Ukraine — or risk the prospect of rationing gas at home. 

Behind closed doors on Wednesday, several EU nations were pushing for clearer guidance from the bloc, saying the current advice is too ambiguous, according to people familiar with the discussions. A number of countries want the commission to clarify that buyers don’t have any workarounds to acquiesce to the Kremlin’s demands. Poland said the selective interpretation of the Russian decree was a tool for Russia to break EU solidarity.

The EU clarified on Thursday that opening accounts in roubles would violate sanctions. But it remains an open question whether a fudge that would be acceptable to Moscow is still possible.

Poland has refused to accept any changes to its payment terms and Gazprom halted gas flows on Wednesday in response. Since before the war in Ukraine, the bloc has been divided between countries such as Poland taking a more hawkish line against Russia and those keener to protect energy supplies.

Bloomberg News. More stories like this are available on bloomberg.com


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