EU clarifies how companies can legally pay for Russian gas

The European Commission has explained how EU companies can pay for Russian gas without breaching the bloc's sanctions against Russia, in an updated guidance on the issue seen by Reuters.

The Commission told countries last month that European companies may be able to pay for Russian gas but only if they followed certain conditions, after Russia demanded foreign buyers start paying for gas in roubles or risk losing their supply.

In updated guidance, shared with EU countries on Friday, the Commission confirmed its previous advice that EU sanctions do not prevent companies from opening an account at a designated bank, and companies can pay for Russian gas - so long as they do so in the currency agreed in their existing contracts and declare the transaction completed when that currency is paid.

Nearly all of the supply contracts EU companies have with Russian gas giant Gazprom are in euros or dollars.

Russia cut gas supply to Poland and Bulgaria last month for refusing to comply with its rouble payment demand. Several EU governments and large importers have sought more clarity from Brussels on whether they can keep buying gas, which heats homes, produces electricity and powers factories across Europe.

Companies should make a "clear statement" saying that when they pay euros or dollars, they consider their obligations under existing contracts to be fulfilled, the guidance said.

It should be understood that "such payments in that currency discharge definitively the economic operator from the payment obligations under those contracts, without any further actions from their side as regards the payment," it said.

By ending its obligations once it deposits euros or dollars, a company could avoid being involved in dealing with the Russian central bank, which is under sanctions, and which could have been involved in converting the euros to roubles.

President Vladimir Putin's decree had said a transaction would only be deemed complete after the foreign currency was converted to roubles.

"Our fundamental position remains unchanged. The payment process set out in the Russian Decree of 31 March would breach EU sanctions, but there are options available for EU companies to continue paying in euros or dollars in line with the agreed contracts," a Commission spokesperson said.