On November 1-2, anonymous Facebook accounts “Wise Sayings” and “World News” (1, 2), as well as Facebook users (1,2,3,4,5) disseminated information that 12 hours prior, Russia had suspended natural gas supplies to Poland and Bulgaria due to their refusal to pay in rubles. Following this, within a few hours, Poland, Austria, and Bulgaria agreed to pay in rubles, and the European Commission granted EU countries the right to purchase gas in rubles.
The post circulated about gas payments is partly false: 1) Russia suspended natural gas supplies to Poland and Bulgaria in the spring of 2022, not in 2024. However, Poland and Bulgaria refused to pay for gas in rubles under Russia’s new system. 2) After consultations, various energy companies from EU member states, including the Austrian company OVM, continued cooperation with Gazprom under certain conditions.
In the spring of 2022, Russian President Vladimir Putin issued a decree demanding that foreign countries pay for natural gas in rubles. The presidential decree outlined a new payment system, according to which representatives of “unfriendly” countries had to open two special accounts in Gazprombank: one in rubles and one in foreign currency. Under the new system, foreign energy companies were to transfer funds for gas payments to Gazprombank’s foreign currency account. The bank would then convert the funds into rubles and transfer them to Gazprom’s account.
Poland and Bulgaria refused to pay for natural gas under the new system, leading Russia to cut off their gas supply on April 27, 2022, not in 2024. Western leaders called Russia’s action blackmail. Poland’s Minister of Climate and Environment, Anna Moskwa, said that Poland’s energy security was ensured and it would not agree to Russia’s conditions. Bulgaria’s Minister of Energy, Alexander Nikolov, noted that the loss of gas supplies from Russia would not cause significant problems for Bulgaria. According to Nikolov, it was obvious that natural gas was being used more as a political and economic weapon.
Finland and the Netherlands also refused to pay for natural gas under the new system. As a result, Gazprom suspended gas supplies to Finland on May 21, 2022, and to the Netherlands on May 31.
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Which energy companies continued cooperation with Gazprom after the introduction of the new payment system?
In May 2022, it was known that after Putin’s decree, cooperation with Gazprom was continued by the following companies:
- MVM, Bulgaria
- VNG, Germany
- Uniper, Germany
- RWE, Germany
- Engie, France
- Eni, Italy
- OMV, Austria
- ČEZ, the Czech Republic
- SPP, Slovakia
- Geoplin, Slovenia
On April 11, 2022, Foreign Affairs Minister of Hungary Péter Szijjártó explained that Hungary had been transferring funds in euros to Gazprombank, which the bank then converted into rubles and transferred them to Gazprom. Based on statements from other companies, they also made initial transfers in euros or dollars according to their original contracts with Gazprom.
It is noteworthy that in the summer of 2024, the German company Uniper announced that it was terminating contracts with Gazprom. An arbitration court ruled in favor of the company due to Gazprom’s breach of delivery terms, ordering Gazprom to pay 13 billion and granting Uniper the right to terminate the contract. In July 2024, the Chief Executive Director of the Austrian company OMV, Alfred Stern, announced that the company was no longer energy-dependent on Gazprom, had significantly reduced the volume of raw materials purchased from Gazprom, and could ensure energy supply to customers even if Gazprom did not deliver natural gas. Additionally, the company has several arbitration cases against Gazprom. Arbitration cases against Gazprom due to supply disruptions have also been initiated by several other European companies, including RWE, Еni, Engie, PGNiG and ČEZ.
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What was the European Commission’s stance on the payment system proposed by Russia?
The European Commission had a somewhat ambiguous position regarding Russia’s proposed payment system. On April 14, 2022, Reuters reported that, according to an internal document seen by the media outlet, paying for gas under the new system would constitute a breach of sanctions. On April 27, Gazprom announced that 10 European companies had already agreed to pay in rubles, to which European Commission President Ursula von der Leyen responded that such action would violate the sanctions regime. In May 2022, Reuters, citing a source, reported that the European Commission advised companies not to open ruble accounts in Gazprombank; however, in its official written guidance to governments, the Commission did not explicitly say that opening such accounts would breach the EU sanctions regime. In May, Gazprom stated that half of its foreign clients had opened two accounts in Gazprombank.
The explanatory document on sanctions imposed against Russia in connection with the invasion of Ukraine (pg. 222) noted that since, under the new decree, payments for natural gas would be considered fulfilled only when funds converted into rubles had reached Gazprom’s account, the payment process conflicted with the sanctions regime because the Central Bank of Russia, which is sanctioned, would be involved in the currency conversion process. Furthermore, the conversion process could be prolonged indefinitely, during which time the funds transferred by a European company may be considered a loan provided to Russia.
However, the same document noted that despite the new decree, European companies may still purchase natural gas from Gazprom provided that certain conditions are met. According to the European Commission, the continuation of communication and cooperation with Gazprombank and Gazprom to reach a relevant agreement did not violate sanctions, nor would the opening of an account in Gazprombank be considered a breach. According to the document, the March 31 decree did not exclude a payment process consistent with EU sanctions, and EU companies could ask their Russian partners to fulfill their contractual obligations in the same manner as before, i.e. by transferring funds in euros or dollars. The European Commission also clarified that if a European company explicitly stated that its payment obligations were fulfilled once it transferred funds in euros or dollars, they could transfer funds to Gazprombank and that would not be breach of sanctions. The Commission recommended that companies seek confirmation from the Russian side that such payments will be acceptable under the decree.
In May 2022, Politico, citing sources, reported that during a mid-May meeting of EU diplomats, Director-General for Energy Ditte Juul Jørgensen advised against opening ruble accounts in Gazprombank but did not say that doing so would violate sanctions. According to Ditte Juul Jørgensen, if Gazprombank converted funds into rubles without an explicit request from the European company, this action might fall outside the European Commission’s jurisdiction. Based on the explanatory document and Jørgensen’s comments, the gas purchasing process was considered complete for European companies once they transferred funds in euros or dollars to Gazprombank’s respective account. Thereafter, the obligation to Gazprom was deemed fulfilled, and further conversion of the funds into rubles and transfer to Gazprom’s account was beyond the company’s responsibility and, therefore, not subject to sanctions.
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