ROME – European energy companies should, for the time being, comply with Russian demands to pay for gas in rubles, said Roberto Cingolani, Italy’s energy security minister.
“I think it would be good, at least for a few months, to allow companies to pay in rubles while we understand the legal framework and the implications,” he told POLITICO, adding that he wanted “quick and very clear pronouncement.” of the European Commission”, which confirms that oil and gas companies can pay in rubles for the time being.
Meanwhile, Rome is preparing for a possible Russian gas shutdown with measures to save energy and even keep coal-fired power plants running longer.
The Kremlin has asked energy companies from “enemy countries” – including all EU members – to pay for gas in rubles to prop up the value of the Russian currency.
Businesses are said to open euro and ruble accounts with Russia’s Gazprombank, and the Russians would not consider the gas payment complete until the rubles are deposited.
The European Commission has warned companies not to open accounts denominated in rubles as doing so would violate sanctions imposed on Russia for invading Ukraine. His guidance states that utilities can pay in euros – and that under existing contracts such a payment would be considered final – and Russia can later convert them into rubles.
For now, the Kremlin is insisting that companies stick to its scheme. Russia’s state-controlled Gazprom halted gas supplies to Poland and Bulgaria last week after they refused to comply with Moscow’s demands.
But Cingolani, Italy’s green transition minister, said it could take months to fully understand the legal implications, leaving oil and gas companies in a bind.
“I believe oil and gas companies cannot risk paying and then being accused of violating sanctions, but at the same time they cannot risk … not paying in rubles,” he said ahead of the EU’s crisis talks -Energy Minister on Monday in Brussels. “These are long-term contracts, the costs would be extremely high.”
His proposed workaround is similar to the Commission’s. The EU energy company would consider the euro payment as the last transaction, while Russia could consider the ruble payment after conversion instead. However, he acknowledged that such an approach could be “optimistic”.
“There are gray areas in this process that could constitute a violation of sanctions. However you do it, there is a problem.”
Meanwhile, Cingolani’s ministry is preparing contingency plans in case Russia halts gas exports to Italy. The country gets around 29 billion cubic meters of gas annually, or 40 percent of its needs, from Russia.
Cingolani said Italy is in a “state of pre-alert,” the lowest of three crisis levels it envisages National Gas Emergency Plan, which he believes means “constant observation and surveillance”. He will present plans for various scenarios to the cabinet on Monday afternoon.
There are currently “no plans for controlled power outages for the industry,” he said, but if the situation worsens, there are “contingency plans” to conserve energy this winter. “Right now we are thinking about weaker measures, temperature restrictions, phased-out coal power generation will continue to work for a year or two,” he said, and promoting renewable energy.
He said the government will issue guidelines asking people to turn down air conditioning in homes, which he says is happening anyway due to high prices. The measures “are not draconian. If necessary, we can do more, with a greater impact. I hope we don’t have to.”
Italy is scrambling to increase gas supplies, and state-controlled energy giant Eni is signing deals with African countries. With those deals, Italy’s energy diversification is “complete,” Cingolani said, adding that Italy would be independent of Russian supplies by the end of next winter.
Even if the war ends, Rome has no plans to return to such an overwhelming reliance on Russian supplies, he said.
“We have learned that it is not wise to become heavily dependent on one country,” Cingolani said. “I knew this and I’ve said it before, but paradoxically we’re only working to solve it because there’s a war. This is a sad thing, appalling. I would have liked to have done this difficult work in peacetime rather than driven by war.”
https://www.politico.eu/article/italy-eu-energy-pay-russia-gas-rubles/?utm_source=RSS_Feed&utm_medium=RSS&utm_campaign=RSS_Syndication Italy ready to pay for Russian gas in rubles - POLITICO