Gazprom Is Reassuring EU Clients Gas Payment Scheme Is Compliant With Anti-Russian Sanctions
Putin issued a 'clarification' decree and Gazprom sent out a letter
Editor’s note: How nice of Russia to bend backward to try to assuage Europeans that her payment scheme is in full compliance with their financial war against her.
Natural gas prices in Europe edged lower as top supplier Russia tried to reassure buyers 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.
Benchmark futures dropped as much 3.2 per cent, before paring some of the losses. 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 central bank would break sanctions. The EU had no comment on Saturday.
Poland and Bulgaria have already been cut off after they failed to meet Moscow’s new rubles-for-gas system. Other countries’ payment deadlines fall later this month.
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.
Gazprom didn’t immediately respond to a Bloomberg request for a comment sent on Saturday.
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.