Eni Set to Open Rubles Account for Russia Gas Unless Told Otherwise by EU

(Reuters) — Italian energy group Eni will begin the process of opening an account in rubles next week to pay for Russian gas unless it is told that would breach sanctions, three sources close to the matter said.

In March, Russian President Vladimir Putin said the world's largest natural gas producer would require countries he terms "unfriendly" to pay for fuel in rubles, in response to sweeping Western sanctions imposed after Moscow invaded Ukraine.

European gas importers have spent weeks seeking clarity from their governments and Brussels as they fear paying in rubles could contravene sanctions, while refusing to do so could trigger major supply disruptions.

Eni, one of Europe's biggest importers of Russian gas, faces a deadline to pay Russia's state-owned Gazprom around May 20, and is preparing to open a ruble account with Gazprombank, the sources said.

"Eni is taking a bit more time to assess developments but will have to start procedures to open a ruble account next week or risk being in breach of contract," one of the sources said, asking not to be named because of the sensitivity of the issue.

Another source said Eni was waiting until the last moment to make a decision "so it can take full stock of things".

Under the new Russian payment system, buyers are obliged to deposit euros or dollars into an account at private Russian bank Gazprombank, which will convert the cash into rubles, place the proceeds in another account owned by the foreign buyer and transfer the payment in Russian currency to Gazprom.

Russia cut gas supplies to Bulgaria and Poland at the end of April after they refused to pay in rubles. 

The European Commission has warned buyers of Russian gas they could breach sanctions if they converted gas payments into rubles, though officials have not clarified the EU's stance on the scheme.

In the interim, Prime Minister Mario Draghi said on Wednesday some importers were already working with the Russian payment plan, although he did not name them.

With no official ruling on the matter, he said it was a "grey zone". 

The European Commission and Gazprom had no immediate comment on Friday, while Eni and Draghi's office declined to comment.

German gas importer VNG said it will transfer euro payments for Russian gas to Gazprombank in the future and expects no problems during a conversion to rubles.

While the situation remains unclear for EU importers, Russia is also showing some signs of hesitation as gas represents a major source of income.

Following on from the cut-off of supplies to Bulgaria and Poland, on Wednesday Moscow imposed sanctions on European subsidiaries of Gazprom after Ukraine stopped a major gas transit route. 

Gazprom has written to companies explaining in part the rubles scheme. According to one source, Eni received letters saying the contract and payment would remain in euros while Gazprom would assume all subsequent risks including conversion into rubles.

Eni, which is 30% controlled by the Italian state, holds long-term contracts with Gazprom that expire in 2035. Last year it imported some 30 billion cubic meters of Russian gas.

Eni CEO Claudio Descalzi has travelled with government ministers in recent months to secure alternative gas flows to help Italy and Europe wean themselves off Russian gas.

 

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