Italy's Eni begins process of opening new accounts at Gazprombank

Italy's Eni has begun the process of opening two current accounts at Russia's Gazprombank -- one in euros and a second in rubles -- on a "precautionary basis" as the deadlines for payments for Russian gas near, the company said May 17.

In a statement, Eni said the move followed Gazprom Export's "unilateral" request to amend the existing contracts between the parties to take into account Russia's new gas payment procedure.

"While Eni has rejected those amendments, the company is going to temporarily open the two accounts without prejudice to its contractual rights, which still envisage payment in euros," it said.

"This explicit conditionality will be included in the payment procedure," it said, adding that deadlines for the payment of gas supplies were scheduled "for the next few days."

Eni said its decision had been shared with the Italian institutions and was taken in compliance with the current international sanctions framework.

The decision was also taken within the context of an ongoing discussion with Gazprom Export "to explicitly confirm that any possible risk or cost deriving from this new payment procedure will be allocated to Gazprom Export," it said.

Russian President Vladimir Putin signed a new decree March 31 requiring EU buyers to pay in rubles for Russian gas via a new currency conversion mechanism or risk having supplies suspended.

A refusal by Bulgaria and Poland to comply with the new ruble-based payment decree saw both countries cut off from Russian gas in late April.

The move triggered new concerns on the European gas market over Russian supply reliability, with prices still at sustained highs.

The TTF month-ahead price reached a record of Eur212.15/MWh on March 8, according to Platts assessments by S&P Global Commodity Insights, and was last assessed May 16 at Eur92.55/MWh, still 250% higher year on year.

Euro invoice

Eni said that as of May 17, Gazprom Export and the relevant Russian federal authorities had confirmed that invoicing and payment would continue to take place in euros.

They also confirmed that a clearing point agent operating at the Moscow Stock Exchange would carry out the conversion into rubles within 48 hours without any involvement of the Central Bank of Russia and that in the event of any delays or technical inability to complete the conversion on time, there would be no impact on supplies.

"Making payments in this way would not face at the moment any European regulation aimed at preventing the implementation of the process outlined above," Eni said.

Eni said that -- as requested by the European Commission -- it had clarified with Gazprom Export that the payment obligations would be deemed as "satisfied" by Eni upon the transfer of euros consistent with the contract.

Eni added that it would clarify this again once the new accounts were opened.

"The new procedure should be neutral in terms of both cost and risk, and not incompatible with the existing sanctions," Eni said. "The payment obligation can be fulfilled with the transfer of euros."

EC view

Speaking earlier May 17, EC chief spokesperson Eric Mamer warned against paying into an account that is not in the currency stated in the contract.

"Let me be clear -- anything that goes beyond opening an account in the currency of the contract with Gazprombank and making a payment to that account, and then issuing a statement saying that with that, you consider that you have finalized the payment, contravenes the sanctions. That is clear," Mamer said.

"Companies have to pay the deliveries in the currency foreseen by the contract," he said. "Anything that goes beyond that is in breach of sanctions."

However, Mamer said the EC had set out guidance for member states on the issue.

"We continue to buy gas from Russia, and companies that buy gas obviously have to make payments, and we're setting out the framework in which they can make those payments," Mamer said.

The German economy ministry also clarified its position in a Twitter post on May 17.

"There are reports that the rules on sanctions against Russia are being relaxed and that energy payments would be possible in rubles," the ministry said.

"The ministry is not aware of this and to our knowledge all companies continue to pay in dollars/euros as per the contract," it said.