News ID: 321451
Published: 0303 GMT May 08, 2022

Russia's Gazprom continues gas exports to Europe via Ukraine

Russia's Gazprom continues gas exports to Europe via Ukraine

Logo of the Russian energy company Gazprom is seen on а station in Sofia, Bulgaria, on April 27, 2022.

Russian gas producer Gazprom said it was supplying natural gas to Europe via Ukraine on Sunday in line with requests from European consumers.

Requests stood at 92.1 million cubic metres (mcm) for May 8 compared with 92.4 mcm on May 7, Reuters reported.

Gazprom has written to its European clients seeking to reassure them that they can keep paying for gas without breaching sanctions.

European companies are scrambling to work out how they can keep buying Russian gas after Moscow demanded payments be made in rubles and the European Commission said such a move would breach sanctions. Poland and Bulgaria have already been cut off and other countries’ payment deadlines fall 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’s not clear if the new order will be enough to assuage the concerns of the European Union, which has said that setting up an account in rubles, and dealing with the Russia’s central bank would break sanctions.

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

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.

Russia has called for companies to open two accounts – one in euros and one in rubles – and stipulated that the payment isn’t settled until the rubles 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 wouldn’t be turned off even if Gazprombank fails to convert those funds into rubles, as long as the hold-up wasn’t caused by sanctions.

Separately, Governor Elvira Nabiullina announced the mechanism also limits the period for converting the euros and dollars into rubles 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.

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