Energy: EU refuses to pay for gas in rubles and prepares for a break with Moscow

Europe 1 with AFP 09:38, May 03, 2022

The European Union refuses to pay for its gas purchases from Russia in rubles and must prepare for a disruption in its supplies, warned the European Commission and the French Presidency of the Council after an emergency meeting of energy ministers of the 27 in Brussels.

Moscow's request to pay for purchases in rubles is "a unilateral and unjustified modification of the contracts and it is legitimate to reject it", Energy Commissioner Kadri Simson said.

"97% of contracts (concluded by European companies) specify the currency for payment and it is either the euro or the US dollar," she said.

Kadri Simson said he had no knowledge of opening ruble accounts.

“Payments are scheduled for mid-May and the majority of companies will respect the rules of the contracts,” she assured.

The French Minister for Ecological Transition Barbara Pompili, president of the meeting, confirmed the "willingness to respect the contracts".

"We must prepare for a suspension of supplies," warned the European Commissioner.

“No immediate risks for supplies”

Several member states asked for clarifications on payment in rubles through the opening of a special account and Kadri Simson promised "detailed clarifications to explain to companies what they can and cannot do".

Poland and Bulgaria paid for their purchases in the currency provided for in their contracts with Gazprom, the Russian gas giant, and refused to open a second account in roubles.

The Russian gas company in retaliation suspended its deliveries, considering that the payment had not been made.

“There are no immediate risks for supplies,” assured the Commissioner.

"But we will not be able to replace the 150 billion m3 of gas purchased from Russia by other sources. This is not sustainable," she acknowledged.

"We can manage the replacement of 2/3 of Russian gas supplies," she said.

Kadri Simson insisted on the need for Member States to fill their reserves and Barbara Pompili underlined the need to "diversify the way of producing electricity and heating".

"Europe must get rid of dependence on Russian fossil fuels," said Polish Minister Anna Moskwa.

"Our reserves will be at 100% capacity for this winter," she said.

“American liquefied natural gas has started to arrive via Lithuania and we will be supplying gas from Norway via Denmark,” she explained.

Finalization of the oil embargo

The ministers also had an exchange on a gradual cessation of purchases of Russian oil and petroleum products planned by the EU in order to dry up European funding for the war led by the Kremlin in Ukraine.

But no decision has been made.

"A new sanctions package is being prepared, but that was not the subject of the meeting," said Barbara Pompili.

"We are working on a new sanctions package", confirmed Commissioner Simson.

"A meeting of the college (all the commissioners, editor's note) will be held on Tuesday in Strasbourg", on the sidelines of the Parliament session, "and President Ursula von der Leyen will specify what has been decided", a-t- she indicated.

The proposal is "finalized and will be adopted by the Commission on Tuesday", said a European source.

"I think the Commission will propose tomorrow (Tuesday) a 6th sanctions package, including the withdrawal of Russian oil," said German Minister Robert Habeck.

The proposal will be submitted to Member States for adoption on Wednesday.

"I don't know if this will be possible by the weekend," the German minister said, however.

If the 27 agree on this measure, the cessation of purchases of oil and petroleum products from Russia will be gradual, over six to eight months, but with measures with immediate effect, in particular a tax on transport by tankers, said a European official.

Several Russian banks exited from Swift

The EU has already imposed an embargo on Russian coal and closed its ports to Russian ships, except for transporting hydrocarbons.

The main importers of fossil fuels from Russia (gas, crude oil, petroleum products and coal) are Germany, Italy, the Netherlands and France.

Alongside the energy component, "there will be other Russian banks that will come out of Swift," Foreign Minister Josep Borrell said on Monday, visiting Panama.

Several European diplomatic sources had indicated this weekend that the most important Russian bank, Sberbank, which represents 37% of the market, should thus be excluded from Swift.

This interbank system is an essential cog in global finance, allowing transactions to be communicated quickly and securely.