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18 May, 2022 12:33

Italian energy major agrees to pay for gas in rubles

Eni is opening accounts in a Russian bank without changing its current contracts
Italian energy major agrees to pay for gas in rubles

Italy’s Eni, considered one of the world’s seven energy supermajors, announced that it has begun procedures to open a dual checking account with Gazprombank to comply with Russia’s new ruble-based gas payment scheme, Corriere reported on Tuesday.

In connection with the approaching payment deadlines scheduled for the coming days, Eni has begun, as a precautionary measure, procedures related to the opening of two current accounts with Gazprombank, one in euro and one in rubles, indicated by Gazprom Export according to a unilateral claim to modify existing contracts in accordance with the new gas payment procedure,” the company said in a statement.

The accounts will allow Eni to pay for Russian gas in accordance with the new rules introduced at the end of March, in response to Ukraine-related economic sanctions placed on the country. According to the publication, the company had been waiting to comply with its contracts with Gazprom. In the statement, Eni noted that it had not been eager to accept the changes to the payment mechanism, and “the opening of the accounts takes place on a temporary basis and without prejudice to any of the contractual rights of the company.”

Under Russia’s new payment scheme, which only effects countries that placed sanctions on Russia, payments in their currency of choice are to be deposited at Gazprombank and the bank will then convert these payments into rubles so they can reach the gas provider, Gazprom Export. Eni said that the latter, along with Russia’s federal authorities, have reassured the energy company that any technical delays or inability to complete the conversion on time will not impact supplies.

The company, however, is worried whether its compliance with Russia’s new terms will be considered a violation of the sanctions on Moscow, and announced it would “initiate an international arbitration on the basis of Swedish law (as required by the existing contracts) to resolve the doubts regarding the contractual changes required by the new procedure.”

The European Commission has been strongly opposed to Russia’s new gas payment scheme. According to spokesman Eric Mamer, while enforcing the sanctions, which were decided on collectively by the EU, “is up to the member states,” these sanctions “have the force of law in the European Union,” and complying with Russia’s demands could be considered an infringement.

Opinions on Russia’s new gas payment scheme differ from company to company across the EU. Finnish gas distribution company Gasum announced on Tuesday that it will not use Gazprom’s proposed payment system, according to a TASS report citing a note from the firm.

French electricity company Engie, on the other hand, said it had reached an agreement with Gazprom on how to pay for gas deliveries from Russia, without specifying the details. Overall, according to Bloomberg, at least 20 European energy companies have set up accounts with Gazprombank in order to comply with the new payment mechanism, as the deadlines for gas payments are drawing near, with the closest scheduled for the end of May.

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