Dusseldorf Russian President Vladimir Putin’s demand that payments for natural gas should only be made in rubles is causing difficulties for European energy companies. The first bills are due soon. According to industry insiders, utilities such as Germany’s Uniper and Austria’s OMV are therefore preparing to open accounts with Gazprombank, Handelsblatt reported on Wednesday.
According to Russia, western countries such as Germany have had to open accounts with the bank since the beginning of April in order to continue receiving gas. Euros or dollars could still be deposited into the Russian account. Gazprombank then exchanges the money for rubles and transfers the amount to the state-owned company Gazprom.
Russia threatens to stop deliveries if payments are not made in rubles. This is also the official reason for the Russian delivery stop to Poland and Bulgaria on Wednesday.
In practice, however, the companies apparently go different ways. A Uniper spokesman told Handelsblatt on Thursday that the group was working on a solution that would allow the company to transfer money directly to a bank in Russia in euros. He was not aware of Uniper trying to open an account with a Gazprombank branch in Europe.
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The company is in the process of “creating the conditions to enable the intended payment method”. To this end, Uniper would exchange information with the federal government. The energy supplier “does not want to violate sanctions under any circumstances,” said the spokesman.
According to a report in the Financial Times, OMV wants to open a ruble account with Gazprombank in Switzerland to pay for gas deliveries. “We have analyzed the information from Gazprom about the payment modalities with regard to the EU sanctions and are now working on a sanctions-compliant solution,” said an OMV spokesman.
The German gas group VNG emphasized that it was taking all measures to continue to ensure the supply “in compliance with the legal regulations, which of course includes the right to sanctions”. According to Handelsblatt information, RWE is also checking with the authorities how exactly payments can be made in the future.
The dates by which companies must pay their gas bills to Russia can vary. This may also be the reason why utilities in Bulgaria and Poland have already had to make a decision, but other companies such as Uniper and OMV can still work on solutions.
Critics accuse the company of using the Kremlin’s intended payment system to circumvent European Union sanctions. The EU Commission wants to do everything it can to prevent gas bills from being paid in rubles, as this would violate its own sanctions against Russia. At the same time, on April 21, she worked out a detour via the European Gazprombank in order to be able to settle gas bills under the sanctions laws.
It remains questionable which path Russia will accept
However, it remains to be seen whether Putin will accept the converted euro payments. A Kremlin spokesman on Wednesday threatened other countries, including Germany, with similar steps as in Poland and Bulgaria, should payments to the state-owned company Gazprom not be made in rubles in the future.
“Russia’s requirement to pay for gas supplies in rubles violates contracts that stipulate payment in euros or dollars. If Gazprom subsequently stops supplying, it is a breach of contract, which may result in claims for damages,” says energy lawyer Anna von Bremen from the Raue law firm.
Kremlin spokesman Dmitry Peskov indicated on Wednesday that the payment method proposed by the EU would also be acceptable for Russia. It remains unclear how resilient this promise is. Many bills are likely to be due in the coming days. Rumors that four European buyers had already paid in rubles were not confirmed on Wednesday.
Meanwhile, German energy companies have made it clear: “The current development has not changed the specific supply situation in Germany for the time being,” said a spokesman for the energy company EnBW. However, the process shows that it was right that the federal government, authorities and companies had been preparing intensively for the possibility of a gas shortage for a long time. “These preparations are also going on intensively with us.”
Complete gas replacement is not possible
Currently, the focus is on exploring alternatives. First of all, one could temporarily fall back on the German gas storage facilities, the filling level of which is currently 33.5 percent – and the trend is rising as long as the gas from Russia is still flowing.
Talks with gas-producing countries like the Netherlands, Norway and others have been going on for weeks. Both countries have pledged to supply more natural gas. In the ports of Rotterdam, companies like Uniper are booking new capacities for the import of liquefied natural gas.
>>> Read here: Four mobile LNG terminals should quickly reduce dependency on Russian gas
In addition, politicians and companies are working on the procurement of four floating LNG terminals for Germany. The first temporary landing site for liquefied natural gas from the USA and Qatar should be able to start work by the end of the year. Until then, it is important to save as much gas as possible, reduce dependencies and use alternatives.
One example is district heating: Here, fossil fuels such as gas are still the most important energy suppliers. Some companies are now trying to obtain more energy from alternatives such as waste incineration plants, solar thermal systems or large heat pumps. However, this cannot completely replace the gas supplies from Russia.
Federal Minister of Economics Robert Habeck (Greens) said on Wednesday in Berlin that the dependency was still 35 percent. At the beginning of the Russian war of aggression in Ukraine, Germany was still importing 55 percent of its natural gas from Russia.
So far, the federal government is aiming to be completely independent of Russian gas by 2024. When asked whether this would be possible in the coming year thanks to the progress made, Habeck replied: “Of course it’s not realistic according to German time. And yet we have to try the unrealistic in some way.”
More: No Russian gas for Poland and Bulgaria: What does the delivery stop mean for Europe and Germany?