EU: Companies with euro gas contracts should not meet Russia’s rouble demand

European companies whose gas supply contracts with Russia stipulate payment in euros or dollars should not meet Russia’s demand for payment in roubles, the European Commission said on Friday.

Moscow said on Friday it would not immediately cut gas supply to Europe, after concerns of a supply shock had sharpened on Thursday when Moscow issued a decree requiring foreign buyers of Russian gas to open rouble accounts in state-run Gazprombank or risk being cut off.

The European Union’s executive said it was working with energy companies and national governments to analyse the decree, but that companies whose gas supply contracts with Russia are fixed in euros or dollars should not breach those terms.

“Agreed contracts must be respected. 97% of the relevant contracts explicitly stipulate payment in euros or dollars. Companies with such contracts should not accede to Russian demands,” a European Commission spokesperson said.

“The EU will respond in a united manner to this latest attempt by Russia to circumvent our sanctions,” the spokesperson said. The sanctions were imposed as punishment for Russia’s Feb. 24 invasion of Ukraine.

Gazprombank has been spared from the harsh sanctions imposed on other Russian banks so European gas buyers could open an account with it and let the lender buy roubles on their behalf. It would have to remain unsanctioned for trade to continue.

The EU’s “gas coordination group” of representatives from national governments and the gas industry met on Friday to discuss the rouble payment demand.

Europe receives 40% of its gas from Europe. It has vowed to cut that dependency by two thirds this year and end it by 2027 following Russia’s invasion of Ukraine.

Brussels will present a detailed plan to quit Russian fuels in May, by hiking gas imports from other countries, expanding renewable energy faster and rolling out heat pumps and energy-saving renovations in millions of buildings. 

[Reuters]