Commission’s ruble-for-gas scheme won’t work, warns Bulgaria – POLITICO

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Workarounds proposed by the European Union, which would allow companies to pay for Russian gas without violating sanctions, are “likely not a real option,” senior Bulgarian officials said Thursday after Gazprom halted gas despite efforts to pay.

The European Commission is trying to clarify what exactly companies need to do to comply with sanctions while continuing to source Russian gas. EU ministers meet on Monday to discuss the issue after several countries called the Commission’s guidance confusing and asked for further clarification.

Russian President Vladimir Putin insisted customers from “unfriendly countries” had to pay for their gas in rubles in an attempt to prop up the value of the Russian currency.

Countries that don’t play will get no petrol – like Poland and Bulgaria on Wednesday.

The Commission is aware that paying Gazprom in rubles would violate EU sanctions. Instead, it proposed a possible way out that would help meet Moscow’s demands while maintaining the sanctions imposed on Russia after it invaded Ukraine.

According to Putin’s March 31 decree, Gazprom’s EU customers must open two accounts with Gazprombank, deposit their payment in the currency of their contract into the first account, and then authorize Gazprombank to convert the funds into rubles, transfer them to the second bank account to transfer and finally pay Gazprom. Only then would the gas export monopoly recognize the payment as having been made.

But that’s against sanctions, the EU said.

“This two-step payment could even constitute a loan from European companies to the Central Bank of Russia,” said a senior EU official, adding: “I don’t see how this system could be compatible with the sanctions.”

Instead, the Commission proposed an alternative whereby European gas buyers could open a hard currency account with Gazprombank, deposit the amount in euros or dollars according to their contract and provide a declaration that their payment obligations have been met.

“If companies just open a bank account and pay in euros, that’s it, there is no breach of the sanctions by the company. After that, it’s up to them what the Russians do with the money,” the EU official said.

Brussels barred companies from opening accounts in rubles.

“What we cannot accept is that companies are obliged to open a second account,” the official said, calling such a system, which leaves control of the cash in Russian hands before the payment is completed, “a clear one.” evasion of sanctions”.

Some EU countries including Germany — Russia’s largest gas customer in Europe — said it would follow the Commission’s proposal.

But there is no indication that Moscow will play along.

Bulgaria has seen first-hand what happens when a buyer fails to comply with Russia’s new demands.

“Putting the money into this account does not complete the purchase,” Bulgaria’s Deputy Prime Minister and Finance Minister Asen Vasilev told POLITICO.

State-owned energy utility Bulgargaz received a contract amendment from Gazprom obliging it to cede control of its money to a third entity to complete the currency transfer without any assurances that it would receive the gas, Vasilev and Energy Minister Alexander Nikolov said.

“We are not comfortable giving taxpayers’ money to third parties over whom we have no control, especially third parties controlled by a country that simply puts us on an enemy list,” Vasilev said.

“You lose all potential legal claims, arbitrage, court cases, everything,” added Nikolov.

After Bulgaria asked for clarifications from Gazprom but received none, Bulgaria decided to deposit $50,000 into its usual account – Gazprom returned the money and turned off the gas.

Vasilev said Sofia wanted the Commission to launch an antitrust case against Gazprom and had secured the Commission’s legal assistance in its forthcoming arbitrage case against the Russian firm.

The issue is likely to recur in the coming weeks as more payments are due from EU customers.

Nikolov called Russia’s demands “really close to blackmail. They do what we want and that’s it.”

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blank Commission's ruble-for-gas scheme won't work, warns Bulgaria - POLITICO

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