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European Commission considers payment for gas in rubles breach of sanctions

According to Simson, the mechanism offered by Moscow of transfering euros to Gazprombank followed by the conversion of the payment into rubles is "a clear breach of sanctions as they provide assets for the operation of the Central Bank

BRUSSELS, May 2. /TASS/. The European Commission considers the payment for Russian gas in rubles a breach of sanctions, though it will provide detailed explanations on possible further actions and payment ways to the European Union’s companies in coming days, European Commissioner for Energy Kadri Simson told a press briefing following an extraordinary council of the EU’s energy ministers in Brussels on Monday.

The European Commission considers Gazprom’s decision to suspend supplies to Poland and Bulgaria a breach of Russia’s contracts, she said, adding that there are no immediate risks for gas supply to the European Union, though the European Commission believes EU states should start getting prepared for suspension of Russian gas deliveries. The commissioner also admitted that the European Union cannot fully replace Russian gas.

According to Simson, the mechanism offered by Moscow of transfering euros to Gazprombank followed by the conversion of the payment into rubles is "a clear breach of sanctions as they provide assets for the operation of the Central Bank."

"Paying in rubles through the conversion mechanism managed by the Russian public authorities and a second dedicated account in Gazprombank is a violation of the sanctions and cannot be accepted," she said, adding that "a more detailed guidance on what companies can and cannot do within the sanctions framework" would be provided.

Most European companies are to make their next gas payments in the middle or at the end of May, according to the commissioner.

All ministers condemned Gazprom’s decision to stop supplies to Poland and Bulgaria, Simson said, noting that this is considered a breach of contracts, as well as an attempt to divide the EU.

"At this stage there are no immediate risks for Europe’s security of supply," she said. Bulgaria and Poland that no longer receive any gas from Russia, are provided via alternative routes through Greece and Germany.

That said, the European Commission urges the EU nations to starting preparing a plan of action in case gas supplies from Russia are halted.

The European Union currently receives liquified natural gas in record volumes, with last week’s deliveries reaching 0.4 bln cubic meters per day, the commissioner said, adding that the level of storage in Europe stands at 32%, rising in all countries.

Meanwhile, Simson admitted that the EU cannot fully replace 155 bln cubic meters of Russian gas per year by supplies from other sources, and urged the EU countries to step up the development of alternative energy.

On April 26, Gazprom submitted to Polish and Bulgarian importing companies a notification on suspension of gas supplies starting April 27 due to their refusal to make final payments in Russian rubles. Russian President Vladimir Putin ordered on March 23 that unfriendly states must pay for Russian gas in rubles, saying that Moscow would refuse to accept payments under gas contracts with those states in "compromised" currencies, particularly meaning dollars and euros.