EC President warns of 'high risk' for companies agreeing to Russian gas payment demands

European Commission President Ursula von der Leyen warned April 27 of the "high risk" to EU companies that agree to new Russian gas payment demands, which she said were in breach of EU sanctions.

Speaking at a webcast press conference, von der Leyen said the EC's guidance on payments in rubles was clear.

"To pay in rubles -- if this is not foreseen in the contract -- is a breach of our sanctions. We have about 97% of all contracts that explicitly stipulate payments in euros or dollars," she said.

"The request from the Russian side to pay in rubles is a unilateral decision and not according to the contracts," she said.

"Companies with such contracts should not accede to the Russian demands. This would be a breach of the sanctions, so a high risk for the companies."

European gas prices soared early April 27 after Russia's Gazprom suspended gas deliveries to Poland and Bulgaria over their refusal to comply with the new ruble payment mechanism.

The benchmark TTF month-ahead price reached as high as Eur125/MWh having been last assessed on April 26 by S&P Global Commodity Insights' Platts at Eur98.03/MWh.

Von der Leyen was responding to a question related to reports that 10 European companies had already agreed to the new Russian payment system and that four companies had already paid according to the new decree.

Russian President Vladimir Putin signed the decree March 31 stipulating that EU buyers must pay for Russian gas in rubles via a new currency conversion mechanism, or supplies could be suspended.

Under the new rules, European buyers would be required to transfer funds in euros or dollars to a new Russian account at Gazprombank, from which payments would be made to state-controlled Gazprom in rubles after conversion.

Von der Leyen's comments come despite an EC guidance document shared with member states on April 21 that said it appeared possible for European buyers of Russian gas to pay according to the terms of the decree on ruble conversion without breaching EU law.

Sixth sanctions package

The EU has already implemented five packages of sanctions against Moscow following Russia's invasion of Ukraine on Feb. 24.

Von der Leyen said a sixth package was being worked on. "The sixth package of sanctions will come in due time," she said, with oil measures also under consideration.

"We are working hard not only to get rid of coal, but we're working on the topic of oil," she said.

Von der Leyen said it was the EC's ambition to become independent from all Russian fossil fuels "for good and forever."

She added that Russia's move to halt gas supplies to Poland and Bulgaria would also hurt Moscow itself. "They are cutting themselves off from important revenues," she said.

Von der Leyen also said she welcomed efforts by the French Presidency of the EU to convene a meeting of EU energy ministers as soon as possible, adding that the latest move from Russia was "another very stark reminder that we need to work with reliable partners and build our energy independence."

"The era of Russian fossil fuels in Europe is coming to an end," she said.