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May 23, 2022

Germany and Italy allow companies to pay in rubles for Russian gas

The move by the two countries follows discussions with the European Union.

Understand the impact of the Ukraine conflict from a cross-sector perspective with the Global Data Executive Briefing: Ukraine Conflict

Germany and Italy have allowed their energy companies to open accounts with Gazprombank to pay for Russian gas in rubles, reported Reuters.

The move, which follows discussions with the European Union (EU), allows the German and Italian gas importers to comply with the EU sanctions against Russia in the wake of the military war against Ukraine. 

The EU has issued two sets of written guidance on ways to purchase Russian gas while still complying with its sanctions.

A legal route remains unclear as EU officials have also advised energy companies not to open accounts with Gazprombank, reported the news agency.

Some of the European nations, including Bulgaria, Poland, and Finland, however, have refused to comply with Russia’s demand to pay for gas in rubles.

As a result, Russia has suspended gas supplies to these countries.

Following the suspension of gas supplies to Poland and Bulgaria, Russian energy giant Gazprom has cut gas exports to Finland, further escalating the energy payments dispute between Russia and the Western nations.

Finnish gas system operator Gasgrid Finland said in a press statement: “Gas supplies through the Imatra entry point have been stopped on 21 May 2022.”

In order to reduce dependence on Russian gas, Gasgrid Finland has signed a ten-year charter deal with US-based Excelerate Energy for a floating storage and regasification unit (FSRU) to help.

The project is expected to provide reliable and secure liquefied natural gas (LNG) to Finland, Estonia, and the Baltic Sea Region.

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