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Italian PM Draghi Now Supports Ruble Payment Scheme for Russian Gas

As the European Union warns companies against paying for Russian gas in rubles, Italy’s prime minister has stated the opposite, saying that European companies are free to pay in Russian currency without finding themselves in breach of sanctions that lack clarity.

“There is no official pronouncement of what it means to breach sanctions,” Draghi said during a press conference on Wednesday, as reported by Bloomberg. “Nobody has ever said anything about whether ruble payment breach sanctions.”

The Italian prime minister also claimed that “most of the gas importers” had already opened ruble accounts with Russian Gazprom. 

On Tuesday, VNG, one of Germany’s largest importers of natural gas, reportedly opened a ruble account with Russian Gazprombank, which will see its euro payment converted into rubles in line with Russia’s scheme to bypass sanctions. 

VNG was the second German company to have done this. In pril, German Uniper also said it was preparing the necessary accounts for the ruble payments. 

The scheme, devised by Russia, envisions national gas purchasers opening two separate accounts with Gazprombank–one in euros or dollars and a second in rubles. Payments are made to the first account and then converted to rubles and transferred to the second account. 

The Italian prime minister’s statement comes as the bloc’s biggest buyers of Russian natural gas await clear instructions. As of Wednesday, the EU had yet to issue any specific protocols for paying for Russian gas. Existing guidelines remain vague, and the only warnings so far have been verbal.

"To pay in rubles — if this is not foreseen in the contract — is a breach of our sanctions," European Commission President Ursula von der Leyen said two weeks ago. "Companies with such contracts should not accede to the Russian demands."

Several EU countries will have to renew supply contracts with Gazprom by the end of this month. 

By Charles Kennedy for Oilprice.com

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  • Mamdouh Salameh on May 12 2022 said:
    With Italy’s Prime Minister saying that European companies are free to pay in rubles for Russian gas supplies without finding themselves in breach of Western sanctions, the momentum for doing exactly that is accelerating.

    Already two of Germany’s largest gas importers VNG and UNIPER and some members of the EU are already paying in rubles.

    The choice facing the EU is ruble payment or no Russian gas supplies particularly that there is no replacement for Russian gas now or for the foreseeable future.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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