In a letter seen by Bloomberg, Gazprom told clients that a new order published by the Kremlin on May 4 “clarifies the procedure” set out in the initial decree on ruble payments.
It’s not clear if the new order will be enough to assuage the concerns of the European Union, which has said that setting up an account in rubles, and dealing with the central bank would break sanctions. The EU had no comment on Saturday.
The new order says that the foreign currency received from buyers is to be exchanged to rubles via accounts with Russia’s National Clearing Center.
Gazprom said in the letter that the order ensures transparency of the cash flows from the foreign buyers and excludes the possibility of any “third party” being involved in the settlements. The procedure as set out appears to exclude the sanctioned central bank.
Gazprom didn’t immediately respond to a Bloomberg request for a comment sent on Saturday.
President Vladimir Putin threw gas markets and policy makers into disarray when he called for gas to be paid in rubles. Poland and Bulgaria were first to be cut off for refusing to engage with the new terms, but several European companies continue to look for workarounds, seeking guidance from the European Commission on what is allowed. The EU issued some guidelines on April 22 and has promised to respond to companies’ requests for more clarity.
Russia has called for companies to open two accounts — one in euros and one in rubles — and stipulated that the payment isn’t settled until the rubles arrive. The EU has said this gives too much power to Moscow and breaches sanctions on the central bank. The EU suggests companies pay in euros, and seek confirmation from the Russian side that the transaction ends there.
EU Suggests Companies Should Keep Paying for Russia Gas in Euros
In late April, Russia’s central bank issued its own clarification of Putin’s original order. The Bank of Russia said that if foreign gas buyers paid into their foreign-currency accounts in good faith, gas wouldn’t be turned off even if Gazprombank fails to convert those funds into rubles, as long as the hold-up wasn’t caused by sanctions.
Separately, Governor Elvira Nabiullina announced the mechanism also limits the period for converting the euros and dollars into rubles to two working days, in a bid to ease EU concerns that the foreign-currency funds could end up being seen as a loan to the central bank.