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

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

Moscow’s request to pay for purchases in rubles is “a unilateral and unjustified change in the contracts and it is legitimate to refuse it,” said Energy Commissioner Kadri Simson.

“97% of contracts (signed by European companies) specify the currency for payment and it’s either the euro or the US dollar,” she said.

Kadri Simson said he had no idea about opening ruble accounts. “Payments are scheduled for mid-May and the majority of companies will comply with contract rules,” she assured. French Minister for Ecological Transition Barbara Pompili, President of the meeting, confirmed the “willingness to honor the treaties”.

“We have to prepare for a supply interruption,” warned the EU Commissioner.

Several member states have asked for clarification on paying in rubles by opening 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 stipulated in their contracts with Russian gas giant Gazprom and refused to open a second ruble account. The Russian gas company retaliated by shutting down supplies after payment had not been made.

“There are no immediate supply risks,” assured the commissioner. “But we will not be able to replace the 150 billion cubic meters of gas we get from Russia with other sources. It’s not sustainable,” she admitted.

“We can handle the replacement of 2/3 of Russia’s gas supply,” she said.

Kadri Simson stressed that Member States need to replenish their reserves and Barbara Pompili stressed the need to “diversify the way electricity and heat are produced”.

“Europe needs to get rid of its dependence on Russian fossil fuels,” said Polish Minister Anna Moskva. “Our reserves will be at 100% utilization for this winter,” she said. “American LNG has started arriving via Lithuania and we will ship gas from Norway via Denmark,” she explained.

Finalization of the oil embargo

Ministers also exchanged views on an EU plan to phase out purchases of Russian oil and petroleum products in order to dry up European funding for the Kremlin-led war in Ukraine. But no decision has been made yet.

“A new package of sanctions 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 commissioners, editor’s note) will take place in Strasbourg on Tuesday,” on the fringes of the parliamentary session, “and President Ursula von der Leyen will clarify what has been decided,” she announced.

The proposal is “completed and will be adopted by the Commission on Tuesday,” a European source told AFP.

“I think the commission will propose tomorrow (Tuesday) a 6th package of sanctions, including the withdrawal of Russian oil,” said Federal Minister Robert Habeck.

The proposal will be submitted to member states for adoption on Wednesday. “I don’t know if that will be possible by the weekend,” the German minister pointed out.

If the 27 agree on this measure, the purchase of oil and petroleum products from Russia will be phased out over six to eight months, but with measures effective immediately, notably a tax on the transport of tankers, a European official said.

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.

Besides the energy component, “there will be other Russian banks that will come out of Swift,” diplomacy chief Josep Borrell said Monday during a visit to Panama.

Several European diplomatic sources had suggested this weekend that the main Russian bank, Sberbank, which accounts for 37% of the market, should therefore be excluded from Swift.

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

© AFP

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