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Uniper, a Leading German Energy Company, is Willing to Pay in Euros to Buy Russian Gas

One of Germany's largest energy companies has stated that it plans to purchase Russian gas through a payment scheme that critics claim will destabilise EU sanctions. Uniper said it would pay in euros, which will then be changed into roubles, to comply with a Kremlin demand that all transactions be conducted in Russian currency. Concerns over supply disruptions have prompted other European energy companies to follow suit. Uniper said that it had no choice but to abide by EU sanctions. According to a spokeswoman, a payment conversion that complies with sanctions law and the Russian regulation is doable.

RWE, Germany's largest energy company, has been tight-lipped on how it plans to pay for Russian gas. After Western allies froze billions of dollars kept in various currencies overseas, Russia stated late and would have to start paying for its oil and gas in roubles to prop up its currency. According to the law, European importers must deposit euros or dollars in a Gazprombank account in Switzerland and then convert the funds into roubles in a second account in Russia. Last week, the European Commission stated that if Russian gas purchasers could complete payments in euros and receive confirmation before any rouble conversion, sanctions would not be violated.

However, different countries have varied interpretations of the initial instructions. EC leader Ursula von der Leyen created consternation this week when she indicated corporations could still be infringing the regulations. According to an EU official, any attempt to convert cash into roubles in Russia would constitute a clear circumvention of sanctions because the transaction would involve Russia's central bank. They cannot accept that corporations are required to open a second account and that the sum in euros is held in complete trust by the Russian leaders and amongst the first and second accounts of the Russian Central Bank. The payment is only accomplished when it is translated into roubles.

Poland and Bulgaria declined to pay for gas in roubles on Tuesday, causing Russian national gas company Gazprom to cut off supply. Both countries had already decided not to extend their Gazprom contracts when they came to an end in 2022. Poland, a vocal supporter of stronger sanctions against Russia, has suggested that the EU should sanction countries that use roubles to pay for Russian gas. As per the climate minister Anna Moskwa, Germany, Hungary, and Austria are rejecting a gas embargo. They expect these countries [who pay in roubles] to face the consequences, and as a result, they will stop paying in roubles.

Russia's decision to not offer all countries the same deadline to begin paying in roubles is seen as an attempt by Russia to divide Western allies over Ukraine. The bulk of EU enterprises’ gas supply contracts with Gazprom include payment in euros or dollars, accounting for 97% of all arrangements. German economy minister Robert Habeck stated that the approach is sanction-compatible, and as per him, the German companies taking this route are following their contracts. Russia supplies around 40% of Europe's natural gas, but the proportion is substantially higher in other nations, and supply disruptions might have a significant economic impact.

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