Eric Mamer, the chief spokesman for the European Commission, could now probably recite the spell if he is woken up in the middle of the night. At his agency’s daily press conference, he is regularly asked how EU companies should deal with the fact that Russia is now demanding that they only pay for oil and gas in rubles.

Mamer then quietly prays down what action the commission recommends to the companies concerned so that they do not violate sanctions. Behind the scenes, however, the tone in the dispute over the ruble payments is becoming increasingly rough.

There is growing misunderstanding in Brussels that some companies are not adhering to the Commission’s guidelines – and have probably coordinated this disregard with their national governments. WORLD explains what the dispute is about.

The EU continues to buy oil and gas from Russia, thereby financing Putin’s war in Ukraine. What difference does it make if you pay in rubles or euros?

It makes a significant difference for the companies affected, their customers and the EU countries affected. The companies are in a quandary: If oil and gas customers comply with the Russian demand and pay in rubles, they may violate EU sanctions against the Russian central bank.

On the other hand, if they do not heed Russia’s request, Russian President Vladimir Putin could stop oil and gas supplies to Europe – with painful economic consequences for consumers and companies.

What is the Kremlin asking for?

Since the end of March, the Russian government has required customers in the EU and other countries described as “unfriendly” to pay for Russian oil and gas in rubles. According to a decree issued at the end of March, customers whose contracts actually stipulate payment in euros or dollars would only fulfill their contractual obligations if they followed a prescribed procedure:

They are supposed to open a euro/dollar account and a ruble account at Gazprombank, which is not subject to EU sanctions. To pay for their oil and gas deliveries, customers are supposed to pay in euros or dollars, then let Gazprombank convert them into rubles and use them to pay for the deliveries. The implicit threat behind the demand: If you don’t pay the bills in rubles, oil and especially gas can be turned off at any time.

Why is the ruble payment a problem at all?

According to the European Commission, which, in coordination with the 27 member states, the US and other G-7 countries, wrote the EU sanctions packages against Russia, companies would violate EU sanctions against the Russian central bank if they invest in oil and gas pay this way. The exchange “would allow Russia to involve the Russian central bank in this process,” according to the EU agency’s guidelines.

But that violates EU sanctions. During the exchange process, the euros and dollars are completely in the hands of Russian authorities and the Russian central bank – and for an indefinite period of time. It could even be seen as a loan from EU companies to the corresponding Russian institutions.

What has the EU recommended to companies?

At the end of April, the authority issued guidelines for European gas customers on how to proceed when paying for Russian deliveries. Accordingly, companies should deposit euros and dollars into their accounts at Gazprombank and make a declaration in advance that they consider their contractual obligations fulfilled if they deposit euros or dollars with Gazprombank – and not later, after Gazprombank has received the payment was converted into rubles and forwarded to Moscow.

Before doing so, the Commission’s lawyers write, the customers should, if possible, obtain a kind of special permit from the Russian side, which confirms that this procedure meets Russian requirements. Depending on how you read it, the EU has thus avoided – or accepted – the obligation to pay in rubles.

Do the gas customers comply with the specifications?

That’s not entirely clear. In the past few days, a number of major European utilities have announced that they have opened euro accounts with Gazprombank as requested. The German gas supplier Uniper is one of them, as is the supplier EnBW, which purchases gas from Russia via its subsidiary VGN in Leipzig.

Both Uniper and EnBW said they had developed constructs to meet Russian demands without violating sanctions. However, the companies are silent about what these constructs look like.

Why is there a fight now?

There are apparently European energy suppliers who have not only opened euro accounts, but also ruble accounts with Gazprombank. The Italian energy supplier Eni, for example, has announced that it has also opened a ruble account with Gazprombank. Commission spokesman Mamer has already stated that opening a ruble account does not comply with the guidelines. Businesses should follow the guidelines; “We do not consider anything else to be advisable.”

Is Eni the only company with a ruble account?

Probably not. The fact that energy companies do not provide detailed information about how they pay for Russian energy is causing distrust in Brussels. For example, Catherine MacGregor, the head of French energy group Engie, said this week in a vague manner that her company had reached an agreement with Gazprom on a “solution that appears to meet both Gazprom’s expectations and our own expectations” in terms of “currency risks” and corresponds to “what we mean by the EU sanctions.”

Other companies also remain vague when it comes to payments. Eni has publicly stated that it has set up a ruble account, says an EU official, “smarter companies just do it without bragging about it.”

What consequences will this have for the companies concerned?

This is unclear and is a highly political question. “EU member states must implement the sanctions and ensure that they are correctly followed by energy companies,” Mamer said. However, it is another question entirely whether national governments will actually go after domestic companies if the authorities are also endangering the supply of oil and gas.

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