Paying For Gas Via Russia-Proposed Mechanism is Violation of Sanctions, EU Official Says

MOSCOW (Sputnik) - Paying for Russian gas in rubles via the conversion mechanism proposed by Moscow is a violation of EU sanctions, EU Commissioner for Energy Kadri Simson said on Monday.

"Many European energy companies are due to make the next payment to Gazprom in mid-May and are trying to understand better what they should do, and we need to give them the clarity that paying in rubles through the conversion mechanism managed by the Russian public authorities and a second dedicated account in Gazprom bank is a violation of the sanctions and can not be accepted," Simson said after the EU energy council extraordinary meeting.

Simson said the Commission will provide companies with a guidance on the recommended course of action in the current situation.

"As it was requested today by ministers, we will provide more detail guidance on what companies can and what they can not do within our sanctions framework in the coming days," the commissioner said.

On 1 April, Russian President Vladimir Putin's decree requiring gas payments in rubles went into effect. It stipulates that all contracts for pipeline gas deliveries with companies from "unfriendly nations" be settled in the Russian national currency under a new payment mechanism.

The new conversion mechanism implies that buyers of Russian gas open ruble and foreign currency accounts in Russia's Gazprombank, transferring payments to their non-rubble accounts and letting the bank sell the currency on the Moscow Exchange. The exchanged rubles will then be transferred to the buyers' ruble account, which they would use to pay for the gas supplied.

On 27 April, Russian energy giant Gazprom suspended gas supplies under contracts with Bulgarian company Bulgargaz and Poland's PGNiG due to their rejection of the new payment procedure.