Germany’s Uniper confident it can keep Russian gas flowing

Bloomberg

German utility Uniper SE is confident its next payment for Russian natural gas will comply with Kremlin demands without violating sanctions, in the latest sign that European companies and their Russian supplier are finding ways to keep the gas flowing.
Uniper, one of Europe’s biggest buyers of the fuel from Russia, will pay in euros when its next bill comes due at the end of the month, the company said. The payment will comply with Russia’s demand that supplies are ultimately paid in rubles, the utility said.
“A payment conversion compliant with sanctions law and the Russian decree should be possible,” a Uniper spokesman said.
European buyers of Russian natural gas have been trying to find a solution to keep the fuel flowing after Russia declared the need for clients to have two accounts with Gazprombank, one for euro payments and one for the ruble conversion. The European Union has said the mechanism would violate sanctions against Moscow.
Most payments under the new system come due this month, with Russian President Vladimir Putin warning shipments could be cut off if “unfriendly” nations don’t comply. Poland and Bulgaria were the first to see their gas flow halted in April after refusing the new terms.
“Putin’s whipsaws are becoming less and less material,” said Tim Partridge, head of
energy trading at DB Group
Europe. “However, I don’t
think we’ve heard the last of the ruble payment fallout,
as Poland and Bulgaria
weren’t the only ‘unfriendlies’ involved.”
Hungary has said it had no choice but to agree to Moscow’s demands, while Austria was confident it could keep the gas flowing and Germany appeared to be pursuing a compromise.
Meanwhile, French gas supplier Engie SA and Finland’s grid operator Gasum reiterated they’re waiting for EU clarification on gas payments.
Russia’s Gazprom PJSC has written to its European clients seeking to reassure them they can keep paying for gas without breaching sanctions.
Even with the rubles-for-gas payment threat, nearly every European country is filling their gas reserves. This is not only to prepare for winter and avoid another energy crisis, but also to protect themselves from Russia’s “fuel-risk playbook,” DB Group’s Partridge said.
Uniper relies on Russia for more than half of its gas under long-term contracts and will continue to pay in euros, the spokesman said. It previously said it could pay in euros to an account in Russia.
The company declined to comment on whether it opened a ruble account.
Another German natural
gas buyer, VNG AG, said it will transfer euro payments for Russian gas to Gazprombank and expects no problems when they’re converted to rubles.
“We will pay the invoice amount, which is still in euros, to the accounts at Gazprombank in accordance with the planned procedure,” a VNG spokesman said without providing details on the contract. VNG is majority-owned by German regional utility EnBW.