Russia Rejects German Gas Payment From Seized Trading Unit

"Gazprom Marketing & Trading" seized by Germany sought to use ruble-payment account

Source: Bloomberg

Russia’s major gas bank rejected a payment from a trading firm that Germany seized from Moscow’s control, the first sign of friction following the take-over amid a broader regional energy dispute.

Gazprombank declined payment for some April and May gas deliveries to Germany and Austria under contract with Gazprom Marketing & Trading Ltd., even as the company sought to pay for the fuel using a rubles account as Russia has demanded, according to people familiar with the matter.

GM&T was previously under the direction of Russian-state gas producer Gazprom PJSC’s German subsidiary. Germany took over the unit earlier this month to secure the country’s gas supplies, and it now risks being shunned under its new ownership.

The European Union and Russia have been in a standoff over gas supplies, with President Vladimir Putin demanding payment in rubles. Under the decree, buyers would set up two accounts with Gazprombank, which would then convert euro payments in one account to rubles in the other.

The EU has suggested that payment can still be made in euros, or else buyers risk running afoul of sanctions on Moscow following its invasion of Ukraine. Russia, the bloc’s top supplier, on Wednesday cut shipments to Poland and Bulgaria over the payment dispute.

While the GM&T case deals with a very small amount of gas — a fraction of a percent of Europe’s total imports from Russia — it highlights complications with the Kremlin’s payment order.

Unclear Process

The case involves a payment process that is “unclear,” Germany’s energy regulator said in a statement. The gas is due to be paid for in euros as agreed in the contract, it said, adding that GM&T can replace the gas by buying on the open market if it needs to.

GM&T, which is based in London, procures gas for business retail arms in Germany and the U.K. Its rejected payment to Gazprombank is part of a medium-term contract to supply 7 terawatt-hours of gas by the end of 2023, according to one of the people familiar with the matter.

The trading firm, which is one of many importers of gas to Germany, is still trying to ensure the transaction is processed and is in negotiations with Gazprombank and Gazprom’s export arm, the people said.

If the gas isn’t delivered, it could further tighten European gas supplies. If GM&T is not able to source the gas from Russia, the trading firm may have to source it elsewhere at higher rate.

  1. Tom says

    This is a war between the Talmudic Khazars ( Fake Jews ) and Christian Russia. The Khazar plan is to conquer
    Russia, split it up into several smaller countries and then STEAL EVERYTHING THEY CAN GET THEIR HANDS ON

  2. SteveK9 says

    This ‘plan’ has not yet made sense to me. Demand payment in rubles or gold, not in euros to be ‘converted’ to rubles. Or, simpler yet, just shut down delivery, keep working on the pipelines to the East, in the meantime, just print rubles for laid off workers.

    1. TRM says

      If you are paid in Euros then the money stays in European banks until they transfer it to Russian banks. That can be seized before it is transferred and about half a trillion already has been.
      Under this setup the Euros are transferred to a Russian bank in Russia then converted to Rubles and Russia actually gets paid.
      PS. Russia will give credit for gold at about $2000 an ounce but will NOT SELL it at that level.

  3. Oscar Peterson says

    Makes sense to me, but it is kind of a misnomer to call it “payment in rubles,” it seems.

    Essentially payment is really in Euros, BUT the Euros must essentially be transmitted to a Russian bank in Russia with the conversion from Euros to Rubles being done right there so that the revenue from the transaction cannot be frozen before Russia can use them. Also, the use of Gazprom Bank as the mechanism for conversion and payment means it can’t be easily sanctioned which protects its operations in general.

    In the case being covered by this particular article, it seems that Germany is trying to pay Gazprom with Gazprom’s own money that has been frozen in Germany, and Gazprom is saying, “No, we intend to get those frozen funds back some day. You can’t pay us with our own funds. Try again.”

Leave A Reply

Your email address will not be published.