EU warns Russian gas buyers that ruble payments breach sanctions

European Companies Made Payments in Rubles in Fears of Supply Cutoff. Ten European companies have already opened the accounts at Gazprombank needed to meet Russia's payment demands, the person said.

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Four European gas buyers have already paid for supplies in rubles as President Vladimir Putin demanded, according to a person close to Russian gas giant Gazprom PJSC.
Even if the other buyers reject the Kremlin's terms, more cutoffs after the halt in gas flows to Poland and Bulgaria Wednesday aren't likely until the second half of May when the next payments are due, the person said, speaking on condition of anonymity to discuss confidential matters.

Ten European companies have already opened the accounts at Gazprombank needed to meet Russia's payment demands, the person said.

Supplies to Poland and Bulgaria were cut off after they refused Gazprom's proposed mechanism for ruble payments, which the gas giant says does not violate European Union sanctions, according to the person. Russia supplies gas via pipelines to 23 European countries.

After the EU imposed sanctions on Russia over its invasion of Ukraine, Moscow demanded that it be paid in rubles for shipments starting April 1. But the bloc told member states that the mechanism the Kremlin proposed, which required opening euro and ruble accounts with state-controlled Gazprombank, would violate the sanctions.

The world’s demand for natural gas is set to decline slightly in 2022 as a result of higher prices and market disruptions caused by Russia’s invasion of Ukraine, according to the International Energy Agency’s latest quarterly update.

The expected small contraction in global gas demand compares with the IEA’s earlier forecast of 1% growth in the previous quarterly update published in January. The downward revision to the forecast amounts to 50 billion cubic meters, the equivalent of about half of last year’s US liquefied natural gas exports. Global natural gas consumption grew by 4.5% in 2021.

Russia’s attack on Ukraine has added further pressure and uncertainty to an already tight natural gas market, especially in Europe. While there are no legal restrictions on importing Russian natural gas to the European Union at this point, the war has pushed EU governments to seek to reduce their dependence on Russian fossil fuel imports as quickly as possible. The IEA published a 10-Point Plan on 3 March outlining a suite of measures to reduce the volume of Russian gas imports into Europe by over a third within a year while remaining consistent with the EU’s climate ambitions.

Spot gas prices have soared to record highs as Europe’s push for more diversified natural gas supply has intensified demand for liquefied natural gas (LNG) cargoes, with some being diverted away from Asia. Average spot LNG prices in Asia during the 2021-22 heating season were more than four times their five-year average. In Europe, spot LNG prices were five times their five-year average, in spite of a mild winter. The prices were also boosted by Russia’s moves, even before its invasion of Ukraine, to drastically reduce short-term gas sales to Europe, which had left European storage levels 17% below their five-year average at the start of the European heating season.

“Russia’s unprovoked attack on Ukraine is above all a humanitarian disaster, but it has also triggered a major energy supply and security crisis,” said Keisuke Sadamori, the IEA Director for Energy Markets and Security. “While stiffer competition for LNG supplies is inevitable as Europe reduces its reliance on Russian gas, the best and most lasting solution to today’s energy challenges would be to accelerate energy efficiency improvements across our economies and accelerate the transition away from fossil fuels towards low-carbon sources of energy, including domestically produced low-carbon gases.”

Russia is Europe’s largest natural gas supplier, meeting 33% of the region’s demand in 2021, up from 25% in 2009. The flows of natural gas transiting through Ukraine have continued so far since the invasion, despite Ukraine itself experiencing supply disruptions and damage to its gas infrastructure.

Natural gas consumption this year is expected to fall by close to 6% in Europe. In Asia, it is expected to grow by 3% in 2022, a marked slowdown from growth of 7% in 2021. Regions such as the Americas, Africa and the Middle East are expected to be affected less directly by gas market volatility, as they principally rely on domestic gas production. But they are nonetheless being affected by the wider economic impacts of Russia’s invasion of Ukraine including rising commodity prices, weaker purchasing power and lower investment due to dented business confidence.

[luckyluke]

Wait So European countries are not allowed to breach their own sanctions? Lol. Is this real life?

[Tititateo]

Different EU countries has difficult energy mixes and different logistical structures for energy.
It takes long time to replaice all oil and gas from Russia with supplies from other countries which also would cost several times more than today.
Several EU countries just can't swith off the oil and gas supplies over the night from Russia because that would cause enormous damages for the economy in EU with massive unemployment in companies shutting down their production and crisis for the housholds.
So the main focus should be to keep economy on track in the EU and even accept paying for gas and oil from Russia over a time period in that currency in the way that is necessary in the current situation.
The EU Comission should help the member states and not make bad much worse by threatening EU members in a crises like the sadly ongoing war in Ukraine!