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Gazprom's Power of Siberia project. Picture: REUTERS/MAXIM SHEMETOV
Gazprom's Power of Siberia project. Picture: REUTERS/MAXIM SHEMETOV

Gazprom has written to its European clients seeking to reassure them that they can keep paying for gas without breaching sanctions, the latest indication that Russia may be trying to find a way to keep the gas flowing.

European companies are scrambling to work out how they can keep buying Russian gas after Moscow demanded payments be made in roubles when the European Commission said such a move would breach sanctions. Poland and Bulgaria have already been cut off. Other countries’ payments fall due later this month.

In a letter seen by Bloomberg, Gazprom told clients that a new order published by the Kremlin on May 4 “clarifies the procedure” set out in the initial decree on ruble payments. 

It is unclear if the new order will be enough to satisfy the EU, which has said that setting up an account in roubles and dealing with the central bank would contravene sanctions. The EU had no comment on Saturday.

The new order is that the foreign currency received from buyers is to be exchanged to roubles via accounts with Russia’s National Clearing Centre.

Gazprom said in the letter that the order ensures transparency of the cash flows from the foreign buyers and excludes the possibility of any “third party” being involved in the settlements. The procedure as set out appears to exclude the sanctioned central bank.

Gazprom did not respond immediately to a request for a comment Bloomberg sent on Saturday. 

President Vladimir Putin threw gas markets and policy makers into disarray when he called for gas to be paid in roubles. Poland and Bulgaria were first to be cut off for refusing to comply with the new terms. But several European companies continue to look for workarounds, seeking guidance from the European Commission on what is allowed. The EU issued some guidelines on April 22 and has promised to respond to companies’ requests for more clarity.

Russia has called for companies to open two accounts — one in euros and the other in roubles — and stipulated that the payment is not settled until the roubles arrive. The EU has said this gives too much power to Moscow and breaches sanctions on the central bank. The EU suggests companies pay in euros, and seek confirmation from the Russian side that the transaction ends there. 

In late April, Russia’s central bank issued its own clarification of Putin’s original order. The Bank of Russia said that if foreign gas buyers paid into their foreign-currency accounts in good faith, gas would not be turned off even if Gazprombank fails to convert those funds into roubles, as long as the hold-up was not caused by sanctions. 

Central bank governor Elvira Nabiullina announced the mechanism also limits the period for converting the euros and dollars into roubles to two working days, in a bid to ease EU concerns that the foreign-currency funds could end up being seen as a loan to the central bank.

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


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