The states of Europe will still have to accept Russian conditions and agree to pay for Russian gas in rubles, the first signs of understanding the changing reality on their part have already appeared.
According to Reuters, the European Commission (whose chairman Ursula von der Leyen until recently categorically rejected such a possibility) sent letters to the EU member states, in which she outlined the option of paying for fuel from the Russian Federation in rubles, without violating the imposed sanctions.
The document states that payment for gas in rubles “allows the Central Bank of the Russian Federation to be included in the transaction scheme, which will be a violation of EU sanctions,” however, the letter notes that European gas companies can accept the settlement scheme proposed by Russia.
The letter from the European Commission cites one of the possible schemes for paying for fuel supplied by the Russian Federation, according to which gas recipient companies open accounts in a Russian bank, to which currency convertible into rubles is credited, after which payment is made. The proposed mechanism eliminates the possibility that the transferred funds will be blocked by Western states.
The authors of the letter specify that the presidential decree Putin on paying for gas in rubles “does not rule out a payment process that would allow EU companies not to violate the sanctions regime.”
It is worth recalling that until recently it was the European Commission that announced that Putin’s decree significantly changes the payment mechanism and creates a new legal situation that allows the Russian side to regulate the exchange rate in its own interests.
At the same time, the European Commission does not have the opportunity to prohibit or authorize them to pay for blue fuel in any form, including in rubles. It can only assess the compliance of enterprises with legal norms, including sanctions, previously established by the European Union.
Leading expert of the National Energy Security Fund, expert of the Financial University under the Government of the Russian Federation Igor Yushkov sees in the appearance of the EC letter signs that the panic of local officials is gradually disappearing.
– Gradually we come to the conclusion that the EU actually agrees to Russian gas payment schemes. After all, the initial rejection was to a certain extent a political decision, since from the point of view of the economy there were no particular objections.
“SP”: – You mean that you did not mind the company?
– It’s them. For commercial structures, the scheme proposed by Russia is quite convenient. Before, they transferred their currency somewhere in Russia and interacted with one counterparty. And now the same approach – only to transfer funds not to Gazprom, but to Gazprombank. Moreover, the pricing formula does not change – as its cost, as previously calculated in dollar terms, continues to be calculated.
Only now the currency is handed over to Gazprombank, which itself is engaged in its implementation on the currency exchange, after which it is handed over to Gazprom. Here, even the exchange rate of the ruble against the dollar and the euro does not bother buyer companies too much, this is a headache for Gazprom, which is concerned about the amount of revenue from the currency. Therefore, the management of European companies has never stated that they will not buy gas for rubles.
“SP”: – Nobody expressed skepticism?
– The only exceptions were representatives of Lithuania and the Polish state oil and gas company, which are extremely politicized structures, so harsh statements came from them. The rest immediately made it clear that they intend to wait for the exact payment scheme to be presented and evaluate it in terms of EU and national government bans. But in general, they stated that the scheme was quite acceptable for them. I repeat – the wave was caught up exclusively by European politicians and the European Union, who considered this unacceptable.
“SP”: – Because you have never seen rubles?
– Partly because at first it sounded like an ultimatum: they say, either pay in rubles, or turn off the gas. Moreover, the initiative to transfer payments into rubles came from Vladimir Putin, which was an additional irritating factor for European politicians. On the whole, for the structures of the European Union, such a crisis situation, with the threat of blocking the gas pipeline, could turn out to be beneficial.
– They could turn to the national governments with a demand to give the EU additional powers, that is, to strengthen the power of Brussels, the European Union as a supranational structure. Motivating this by the fact that it is a single structure that can resolve the crisis that has arisen. Here the matter is further complicated by the fact that in this difficult situation within the European Union there are attempts to redistribute spheres of influence. But now those who tried to arrange such a redistribution understand that their provocations, delaying the transition to ruble payments, may well result in a halt in gas supplies.
“SP”: – It is unlikely that they achieve this.
“This will not change the situation in Ukraine or Russia’s foreign policy in any way. Yes, our economy will experience difficulties from a shortfall in revenue from the sale of gas, but it will definitely not change its foreign policy approaches.
“SP”: – And what does this mean for Europe?
— There will be a colossal shortage of gas, hints of this are already appearing. Interruptions in the supply of electricity will begin, enterprises using gas as a chemical raw material will stop.
The point is that the other gas is from Norway. Algeria, Azerbaijan – less affordable. Demand for the remaining gas will soar, prices on the exchanges will soar. It will turn out that the Europeans will lose the opportunity to buy not only Russian gas, but also any other, because it will be super expensive. And there will be a problem with the next heating season, as there will be a shortage of gas, and part of the industry will have to be stopped in order to last the heating season. In addition, in houses and social facilities, the temperature would have to be reduced – from 20-22 to 10-15 degrees.
Apparently, business made it clear to officials that it is impossible to refuse Russian gas here and now, such a step is fraught with the collapse of the European economy and a humanitarian catastrophe. It is impossible to replace 150 billion cubic meters of Russian gas.
“SP”: – LNG will not save?
— There are no new capacities for them. The wave of commissioning new LNG plants has just ended, the next one will be in 2025-2027. Even receiving LNG capacities are not enough: in the countries where we supply gas through pipes, there were 70 billion cubic meters of free LNG capacities. Even if contracts with gas buyers in Asia are suddenly terminated and this gas is sent to Europe, it will still not be possible to cover the needs of the continent.
“SP”: – Were there any attempts of such “reorientation”?
– Yes, recently the trader frankly “did” Pakistan, saying that he would not fulfill the contract, and redirected the fuel intended for the country to European consumers. As a result, Pakistan was left without gas. Such is the cynicism and attitude towards some countries. So, the conclusions of the European Commission in this situation are understandable.
Of course, the letter contains a lot of meandering wording. Some technical details of currency transactions are unclear. But in general, we do not observe a single ban on changing contracts and paying in rubles at the level of the EU and national governments. Therefore, in my opinion, this is a positive signal in general for the continuation of gas trading.